TKC LONDON LTD V ALLIANZ INSURANCE PLC

[2020] EWHC 2710 (Comm), Queen’s Bench Division, Commercial Court, Richard Salter QC (sitting as a Deputy Judge), 15 October 2020

Insurance (business interruption) – Meaning of “loss” – Meaning of “accident” – Inherent vice – Causation – Striking out – CPR 24.2

TKC’s cafe was closed between 21 March and 4 July under the Covid Regulations. In that period stock in the form of foodstuffs deteriorated and became unusable and unsaleable. TKC sought to recover from its insurers Allianz under a Commercial Select Policy, which described the cover as “All Risks”. The Property Damage Section covered “Damage to Property Insured at the Premises”. The word “Damage” was defined as meaning: “Accidental loss or destruction of or damage to Property Insured”. The Business Interruption section was headed “Business Interruption by any Event” and provided cover for “Loss resulting from interruption of or interference with the Business carried on by the Insured at the Premises in consequence of an event to property used by the Insured at the Premises for the purpose of the Business”. The word “Event” was defined as: “Accidental loss or destruction of or damage to property used by the Insured at the Premises for the purpose of the Business”. The Business Interruption section included an extension which provided cover for: “Any claim resulting from interruption or interference with the Business in consequence of ... accidental loss, destruction or damage ... to any Property”. Both the Property Damage and Business Interruption sections excluded loss caused by or consisting of inherent vice, latent defect, gradual deterioration ...”. An additional exclusion from Business Interruption cover was loss “caused by or consisting of change in temperature, colour, flavour, texture or finish”. Further, the Basis of Settlement clause in the Business Interruption section imposed a condition on recoverability that “There is an insurance in force covering the interest of the Insured in the property at the Premises against such Event …”.