Interruption of trade is covered

SANTAM: WILL PAY CLAIMS THAT INCLUDE DISEASE

But company to appeal indemnity period ruling in high court.

Santam announced yesterday it will now settle valid claims for all commercial policies with contingent business interruption (CBI) extensions.

This is in addition to those covered by its hospitality and leisure division that it agreed to settle earlier this month which had been specifically affected by court judgments. This means claims of the total base of Santam’s 4 000 commercial clients with CBI policy extensions that cover contagious and infectious diseases, will be paid out.

The earlier decision for hospitality and leisure clients affected 1 300 clients. Large corporate policies in Santam’s specialist business will be handled on an individual basis.

According to Santam, it decided to include the claims emanating from all commercial policies with CBI extensions after analysis of recent court judgments. The court ordered Santam to pay business interruption claims.

In November, a full bench of the Western Cape High Court found in favour of Ma-Afrika Hotels and Stellenbosch Kitchen against Santam, after the insurer rejected their business interruption claims although its policies included cover for infectious or notifiable diseases.

The court ordered Santam to pay the full business interruption losses, including the impact of the government’s response to Covid-19 over 18 months, without limitations, as well as Ma-Afrika’s legal costs. Ma-Afrika Hotels and Stellenbosch Kitchen approached the court for two orders:

to hold Santam liable to cover them for losses caused by Covid-19 occurring within a radius of 40km of the insured premises.

to order that the period covered is 18 months.

Santam rejected the claims because it said a notifiable disease did not occur within a 40km radius of the business premises and the losses were due to the lockdown and/or general concern of the public. The insurance giant also said the policies covered insured loss and not economic hardship due to the pandemic.

But the court concluded that Covid-19 and government’s response were part of the same insured peril and the losses Ma-Afrika hotels and Stellenbosch Kitchen suffered were exactly what they had insured against.

Yesterday Santam said it has concluded the judgments in these cases can be applied to all policies with contingent business interruption extensions.

Lizé Lambrechts, Santam Group CEO, said the indemnity period was relevant only to the hospitality and leisure division. The company is appealing the judgment of the Western Cape High Court regarding the indemnity period. –