RSA faces group action over disputed Cottagesure BI wording

The businesses, which operate in the self-catering accommodation market, bought business interruption policies underwritten by RSA through Gallagher’s Cottagesure scheme.

RSA joins a list of other insurers including Hiscox and QBE, which face challenges over the extent of cover provided by their business interruption policy wordings.

Simon Sloane, a partner specialising in dispute resolution at law firm Fieldfisher who is advising the group action, told Post: “We anticipate will have over 50 potential claimants looking to recover under that business interruption policy.”

The grounds for the groups’ wording dispute is similar as those of groups that have come to light challenging Hiscox and QBE.

“They’re relying on extensions by way of public order or, in the case of RSA, there is a favourable extension for denial of access within a radius of 25 miles, and no exclusion for pandemic or CoV mutations,” said Sloane.

The policies in question contain an extension to cover for “disease, murder, suicide, vermin and pests”, which includes cover for losses resulting from “closure or restrictions place on the premises as a result of a notifiable human disease manifesting itself at the premises or within a radius of 25 miles of the premises.”

The clause bears resemblance to one in policies bought by nightclubs underwritten by QBE, which are also now the subject of a dispute over coverage.

In both instances, the rejection of claims appears to have been justified by distinguishing between specific instances of the disease with a 25-mile radius and wider government actions with regard to what caused the closures.

Covid-19 became a notifiable disease in different parts of the UK on different dates, with Scotland moving first on 22 February, followed by Northern Ireland on 26 February, England on 5 March and Wales on 6 March.

RSA said in a statement: “We understand that many businesses are worried about coronavirus and we’re committed to supporting them.

“Unfortunately, only some businesses under the Cottagesure scheme will be covered for the coronavirus outbreak – those who had an outbreak of the illness at, or near, their premises and had to close as a direct result of that case, rather than as a consequence of the wider government restrictions put in place.

“We are encouraging affected policyholders to contact their broker if they have questions and for support in registering a claim where appropriate. We’re working closely with our broker partners to help customers as much as possible during this time.”

A spokesperson for Gallagher, which operates the Cottagsure scheme, said: “We are working closely with RSA to help support businesses that are affected by the current situation, and understand this is a difficult time.

“Notifiable diseases are within the scope of the policy subject to its terms and conditions and RSA is reviewing claims from between late February, when Covid-19 became a notifiable disease, to 23 March when all non-essential businesses were closed by the Government.

“Losses incurred after this date will not be covered under the policy because they are due to closure of businesses by the Government which is not covered under the terms of the policy.

“Customers wishing to make a claim should contact us and we will assist.”