Court docket construes software of coverage sub-limits in Covid-19 BI declare

The newest judgment handed down within the spate of latest Covid-19 enterprise interruption (BI) instances is PizzaExpress Group Restricted & Ors v Liberty Mutual Insurance coverage Europe SE & one other [2023] EWHC 1269 (Comm).

The judgment is in respect of a preliminary situation in regards to the development of provisions referring to coverage limits. The Pizza Specific restaurant group (collectively Pizza Specific) claimed for round £260 million in enterprise interruption (BI) losses. The Defendant insurers contended that the declare, if coated in any respect, would give rise to a most indemnity of £750,000 for 3 occurrences or £250,000 for one incidence (plus £50,000 for Claims Preparation Bills).

Find for the Defendant insurers, Justice Richard Jacobs held that Pizza Specific’ proposed development of the Coverage “unrealistically dissects what is supposed by “limits of legal responsibility” … and ends in a studying which might shock any affordable reader of the coverage”.


Pizza Specific’ declare for BI losses stemmed from closures and restrictions on using its eating places between March and November 2020, launched by the federal government in response to the Covid-19 pandemic.

Pizza Specific’ coverage was underwritten by Liberty Mutual Insurance coverage Firm SE and XL Insurance coverage Firm SE and was on a normal kind Aon Trio Property and Enterprise Interruption wording.

Pizza Specific’ claims had been made beneath two extensions within the BI part of the Coverage:

(i) Extension 2(a)(i) offered cowl in respect of “any incidence of a Notifiable Human Illness on the Premises …that causes restrictions on using the Premises on the order or recommendation of a statutory, native or different competent authority“; and

(ii) Extension 2(b)(v) offered cowl in respect of the “closure or sealing off of the Premises … by the coverage, hearth brigade or different statutory authority or native or transport authority on account of an emergency occasion on the Premises or inside a radius of 1 mile of the Premises … which … prevents or hinders using the Premises or entry thereto …“.

Insurers denied cowl on the premise that each extensions had been restricted to “localised cowl” which was not supposed to increase to central authorities motion which resulted within the closures and restrictions on using Pizza Specific’ eating places. Whereas this situation is but to be decided, the Court docket on this occasion thought of a preliminary situation concerning the development of the Coverage’s limits of legal responsibility. The problem was decided along with related points arising from different Covid-19 BI instances.

Coverage phrases

The provisions referring to the bounds of legal responsibility had been contained within the Coverage Schedule. Part 2 of the Schedule associated to BI claims.  Web page 4 of Part 2 contained an itemised desk together with a column offering the “Restrict of Legal responsibility” per merchandise. The footnote to this desk famous: “Further limits and/or sub-limits apply – these are listed later within the Schedule”.

Web page 5 of Part 2 contained a piece headed “Sub-limits”, a part of which is reproduced beneath:

– Sub-limits kind a part of the Restrict of Legal responsibility and don’t apply along with it;
– all Limits of Legal responsibility apply anyone Prevalence;
– limits are inclusive of the Extra;
until in any other case acknowledged. If a couple of Sub-limit applies to the identical loss, the Insurer’s legal responsibility can be restricted to the lesser Sub-limit.

In respect of Part 2

Prolonged Incident
– Notifiable illness
– Prevention of Entry & Lack of Attraction

GBP 250,000
GBP 250,000


Web page 6 of Part 2 of the Schedule contained provisions headed “Extra” which offered:

“… Insurance coverage Limits (and Sub-limits) are inclusive of Excesses.
Just one Extra will apply in respect of anyone Prevalence. …”

Of relevance was that, neither the time period “Limits of Legal responsibility” nor “Sub-limits” was outlined within the Coverage which, as demonstrated beneath, used totally different phrases to explain Coverage limits and was not constant in using terminology or capitals.

The events’ positions

The principle level of competition between the events was whether or not the Sub-limits set out on web page 5 of Part 2 of the Schedule got here throughout the expression “all Limits of Legal responsibility apply anyone Prevalence” in circumstances the place neither “Restrict of Legal responsibility” nor “Limits of Legal responsibility” was outlined within the Coverage.

Pizza Specific ran the argument that, on a pure studying of the Coverage phrases, there was a transparent distinction between “Limits of Legal responsibility” and “Sub-limits”. They contended that no affordable reader would interpret the phrase “Limits of Legal responsibility” as having one that means within the first line on web page 5 of Part 2 of the Schedule (expressly distinguishing it from “Sub-limits”), however a unique, considerably contradictory, that means within the second line (encompassing “Sub-limits”). Amongst different contentions, they submitted that this was much more obvious from the third line on web page 5 the place the phrase “limits” was supposed to confer with each “Limits of Legal responsibility” and “Sub-limits”, and that if this was not the case, the draftsperson would have used “Limits of Legal responsibility” and “limits” to convey a single that means in consecutive traces on the identical web page. As such, Pizza Specific claimed that solely the “Limits of Legal responsibility” may very well be aggregated to anyone Prevalence; the “Sub-limits” not being topic to such an software. They argued that, had there been such an intention, “Sub-limits” would have been expressly acknowledged to be topic to the anyone Prevalence aggregation, which it was not.

The Insurers submitted that, on any affordable studying of the Schedule, all limits (whether or not “Limits of Legal responsibility” or “Sub-limits”) had been topic to the appliance of “anyone Prevalence”, until in any other case acknowledged (and there was nothing in any other case acknowledged).


In accepting the Insurers’ place, Justice Jacobs discovered that the pure assumption and apparent conclusion was that the entire figures set out on web page 5 of Schedule 2 got here throughout the expression “all Limits of Legal responsibility apply anyone Prevalence“. He discovered there to be no indication within the Coverage that the phrase “all Limits of Legal responsibility” (capitalised however not outlined) was supposed to imply one thing narrower than its atypical that means. In its atypical that means, the expression would embody all limits of legal responsibility together with the “Sub-limits”.  Excluding sub-limits would result in a “very odd conclusion“. He held that sub-limits had been clearly limits of legal responsibility and the phrase “all” was supposed to encapsulate all limits. Every of the three bullet factors on web page 5 had been supposed to use to the desk that adopted and to the Schedule as an entire, with any departure having to be “in any other case acknowledged”. As there was nothing in any other case acknowledged in respect of the sub-limits for notifiable illnesses and prevention of entry, the “anyone Prevalence” wording utilized to these explicit sub-limits.


The results of the choice is that, even when there may be cowl for Pizza Specific’ losses beneath the related extensions, will probably be restricted to £250,000, or alternatively a small portion of the declare.

Jacob J seems to have had little problem reaching his conclusion, discovering that the reply was “clear”. He additionally refused Pizza Specific permission to attraction though it could be that Pizza Specific will search permission from the Court docket of Attraction.

Topic to the end result of any such software, and any attraction, the choice probably has implications for different policyholders on this wording to the extent that such policyholders have relied on the identical argument, with the impact of lowering cowl for vital claims to a fraction of their worth.

Antonia Pegden

Nikita Lulla

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