Background
Oxford University colleges, halls, and related entities claimed under Aviva commercial combined policies for business-interruption losses suffered during the COVID-19 pandemic. The policies covered interruption or interference following a specified disease occurring at the insured premises or within five miles, but stated that Aviva would not cover a reduction in revenue caused by an occurrence of a specified disease outside that area.
At a trial of preliminary issues, the parties assumed that the claimed losses were proximately caused both by COVID-19 cases within the five-mile radius and by cases outside it. The central question was whether the outside-radius provision excluded cover when insured and excluded occurrences were concurrent proximate causes. The claimants argued, among other things, that the provision was not a true exclusion or applied only when outside-radius cases were the sole cause.
The Court’s Holding
Mr Justice Michael Green decided the scope-of-cover issue for Aviva. The outside-radius provision was a clear exclusion, not merely a clarification of the insuring clause. Its reference to “any premises” did not confine the exclusion to locations other than the scheduled premises, and the words “caused by” did not justify inserting a requirement that outside-radius occurrences be the sole cause.
Because COVID-19 occurrences outside the five-mile radius were assumed to be concurrent proximate causes of the losses, the exclusion prevailed over the insured causes within the radius. Aviva therefore was not liable for those losses under the disease clause. The trends-clause issue did not arise; the court added that, had coverage existed, outside-radius occurrences could not have been used through the trends clause to reduce the indemnity.
Key Takeaways
- An express exclusion for loss caused by disease occurrences outside a specified radius can defeat coverage when occurrences inside and outside the radius are concurrent proximate causes.
- Policy language stating “We will not provide cover” may operate as a substantive exclusion even when it appears beside the specific grant of cover rather than in a general exceptions section.
- A trends clause quantifies covered loss and cannot be used to remove coverage that the insuring provisions otherwise provide.
Why It Matters
The judgment distinguishes these policies from the disease clauses considered in the FCA test case, where outside-radius cases were not expressly excluded. It shows that the outcome of COVID-19 business-interruption claims can turn on whether the policy expressly removes losses caused by occurrences beyond the geographical limit.
The decision also illustrates the effect of concurrent-causation principles: when one proximate cause is insured and another is expressly excluded, the exclusion will generally prevail as a matter of policy construction.