Several insurers are facing expanded liability exposure after the High Court permitted racecourse operators to pursue individual business interruption (BI) claims for each facility at a single location, potentially increasing the value and volume of pandemic-related payouts.
The ruling came from the Business and Property Courts of England and Wales in a case involving 22 claimants, including Bath Racecourse Co. Ltd., against Liberty Mutual Insurance Europe SE, Allianz Insurance plc and Aviva Insurance Ltd.
The decision allows per-premises claims for COVID-19-related closures but excludes additional claims based on extensions or modifications to closure orders.
Justice Sean O’Sullivan ruled that certain claimants operate distinct businesses - such as racecourses, hotels and recreational facilities - within one geographic site, and each may be treated separately for insurance purposes. One example cited in the proceedings was Lingfield Park Ltd., which operates a racecourse, a 116-room hotel, a golf course and resort at a single location.
According to court records, Lingfield Park estimated its racing facilities lost £6.4 million in gross revenue, its hotel lost £4.8 million, and its golf course entry left the loss estimate blank. The indemnity periods differed, with 12 months for the racecourse and 36 months for the hotel. These differing periods formed part of the court’s reasoning for treating each facility as a distinct claim.
The insurers argued that despite the varied operations, the businesses functioned from the same address and therefore should be treated as one entity. They posed a rhetorical question about whether individual bars within a racecourse or hotel could also be treated as separate for loss calculation.
The court disagreed, stating that when facilities require different indemnity periods, separate loss assessments are necessary.
"It follows that, as a matter of legal analysis, the applicable limit would be different for the racecourse as compared with the hotel, even if it is hard to imagine the aggregate limit ever being reached as a result of a single example of physical damage," O'Sullivan wrote.
However, the court did not support the claimants’ argument that government order extensions could result in additional or renewed losses. The court found that a single loss occurs when closure begins and continues until the disruption ends.
In June, the US 3rd District Court of Appeals dismissed a consolidated complaint filed by Ralph Lauren Corp., an investment group, and two luggage makers, ruling that the plaintiffs failed to allege any physical loss or damage as their properties remained intact and functional.
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