An expository analysis of the consequential loss (business interruption) policy in light of covid-19 and the UK and SA litigation
Date
2024
Authors
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Publisher
University of the Witswatersrand, Johannesburg
Abstract
The consequential loss (CL) usually referred to as the business interruption (BI) policy, although about 120 years old, has, until recently. not been subject to much litigation and therefore has had little benefit of judicial interpretation. On the other hand, it is one of the most complex of non-life policies. Things changed with the Covid pandemic, in that, the BI policy was subject to considerable litigation. About 2 000 cases were filed in the US with the litigation still ongoing at the time of the writing of this dissertation. The South African and UK courts litigated but on a different aspect of the policy, compared to the US. The US litigation involved the main policy whereas the UK and SA involved an extension to the policy. This extension does not form part of the US policies. The UK and SA courts relied largely on general legal principles of interpretation of contracts, applied to insurance contracts, to reach their conclusions. In so doing, the courts in these jurisdictions paid little attention to the context and construction of the BI policy taken as a whole, including the historical reason for its existence. Nor did the courts consider the issue of insurability to any detailed extent. It is also pointed out that the leading text book on this policy does not approach the policy in terms of fundamental principles. This dissertation systematically sets out the history, purpose, structure and interpretation of this policy, restating the policy in terms of its history and purpose. The dissertation sets out the lessons which can be learnt from the Covid-19 litigation. An analysis is made of the main policy and the extensions having regard for the various wordings of the BI policy. Finally, the possibility of developing a BI policy which may respond to a future event of a pandemic is considered
Description
A dissertation submitted to the Faculty of Commerce, Law and Management of the University of the Witwatersrand, in fulfilment of the degree of Masters of Commerce (Insurance and Risk Management) by research
Keywords
Consequential loss, UCTD, Business interruption policy, Covid-19 litigation, Causation, Uninsurability, Policy interpretation