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· In a significant judgment by the Western Cape High Court of South Africa it was found that the insurance company Santam was liable to pay for business interruption losses related to the Covid-19 lockdown
· The court also ordered the insurer to pay for the impact over the policy period of 18 months and that it should pay the applicant’s legal costs
In a significant judgment by the Western Cape High Court of South Africa it was found that the insurance company Santam was liable to pay for business interruption losses related to the Covid-19 lockdown. The court also ordered the insurer to pay for the impact over the policy period of 18 months and that it should pay the applicant’s legal costs.
The High Court has accepted the contention of Ma-Afrika Hotels and Stellenbosch Kitchens that it has claims against insurance giant Santam, in a case over business interruption during the Covid-19 lockdown.
The two businesses had joined up with Insurance Claims Africa (ICA) in litigation against Santam earlier this year. ICA is a public loss adjustment company that has been representing over 750 tourism and hospitality businesses in a bid to get insurers to pay up business interruption claims. The court referred to pandemic related cases from all over the world, including the United Kingdom and the United States.
Santam’s lawyers argued that the policies “insured loss, subject to their terms, not economic hardship as a consequence of the Covid-19 pandemic”. It had rejected lockdown claims from Stellenbosch Kitchen and Ma-Afrika. The court said that whether or not there were Covid-19 cases within the radius the insurer covers, the businesses would have been forced to suspend trade. Many feel that the outcome of Ma-Afrika has some certainty on the liability of insurers. In a joint statement with Ma-Afrika, insurance body ICA welcomed the judgment, calling it a “resounding victory” for tourism and hospitality businesses.
In September, Santam said it had set aside R1.3 billion in the six months to end June for business interruption claims as its “best estimate” – this including the R1 billion it was paying out as relief. However, it added that if the court ruled against it in the Ma-Afrika/ Stellenbosch Kitchen case, it was uncertain about what it might have to cough up.
In a similar case, a ruling in July involved Café Chameleon and insurer Guardrisk, where the court found the insurer was liable for the restaurant’s losses since the start of the pandemic, which is due before the Supreme Court of Appeal this month.
