Executive Summary
- The case concerns Carbis Bay Hotel Ltd and Atlantic Bay Hotel Ltd’s claim against American International Group Ltd (AIG) for business interruption losses due to Covid-19 lockdowns.
- The core legal issue is whether Covid-19 qualifies as an “Infectious Disease” under the Business Interruption (BI) insurance policy’s Infectious Diseases (ID) Extension.
- The Policy covers losses from closure due to specified infectious diseases but does not explicitly list Covid-19.
- The insurers deny coverage, arguing the Policy’s disease list excludes Covid-19; claimants argue for a broader interpretation including Covid-19.
- The court’s decision will clarify the scope of BI insurance coverage for pandemic-related losses.
Sanctions Highlights
- No direct sanctions imposed or referenced in the judgment.
- However, the case implicates insurance regulatory compliance under UK law, particularly regarding policy interpretation post-Covid-19.
- Sanctions implications flagged due to BIS (UK’s Department for Business, Innovation & Skills) regulatory environment influencing insurance contract enforcement and claims handling.
Emerging Risks
- Ambiguity in insurance policy language regarding novel infectious diseases creates litigation risk for insurers and insured parties.
- Potential for increased claims disputes in the hospitality sector over pandemic-related business interruption coverage.
- Risk of insurers limiting exposure by narrowly interpreting disease definitions, prompting regulatory scrutiny.
- Future pandemics or government-imposed closures may trigger similar coverage disputes absent explicit policy wording.
Geopolitical Impact
- The case arises under UK jurisdiction, reflecting UK government Covid-19 regulatory measures (e.g., Health Protection Regulations 2020).
- Highlights UK’s legal environment balancing public health mandates and commercial insurance obligations.
- Outcome may influence UK insurance market practices and regulatory approaches to pandemic risk coverage.
- Sets precedent for UK businesses and insurers on pandemic-related contractual liabilities.
Economic Intelligence
- Claimants’ losses stem from mandated closures of multiple hospitality venues in Cornwall from March to July 2020.
- The Policy’s indemnity limit for infectious diseases is £100,000, but claimants’ losses exceed this significantly.
- The decision impacts financial exposure of insurers and liquidity of hospitality businesses affected by Covid-19.
- Broader economic implications for UK hospitality sector’s recovery and insurance market stability.
Strategic Recommendations
- Insurers should review and clarify infectious disease definitions in BI policies to mitigate future coverage disputes.
- Businesses should ensure insurance policies explicitly address pandemic-related risks and indemnity limits.
- Legal teams must monitor evolving case law on pandemic insurance claims to advise clients accurately.
- Regulators should consider guidance or mandates on transparent policy wording to reduce litigation.
- Stakeholders should prepare for potential regulatory changes affecting insurance claims handling post-pandemic.
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**Source Notes:**
*Sanctions Intelligence Digest* — [https://empyreanprotocol.com/litigation/view/www.bailii.org/ew/cases/EWHC/Comm/2025/1041.html](https://empyreanprotocol.com/litigation/view/www.bailii.org/ew/cases/EWHC/Comm/2025/1041.html)