CL-2023-000064 - [2025] EWHC 1870 (Comm)

It will be apparent that, at least in the context of damage-related BI, I would find it difficult to avoid treating each new insured event (i.e. physical damage causing interruption to business) as requiring a fresh loss calculation with a new indemnity period. The two aspects go together, because a loss calculation requires the identification of an indemnity period and the indemnity period starts from the date of damage. This leads me down a very similar path to that taken by Butcher J in Stonegate: looking for “triggers” or the occurrence of an insured event.

I am conscious that the Supreme Court in FCA v Arch (supra) made clear (at [215]) that the “the interruption is not part of the description of the insured peril”. Rather, the interruption to the business represents “the nature of the harm to the policyholder’s interest in the subject matter of the insurance for which an indemnity is given if it is proximately caused by an insured peril”. But it does not seem to me to follow that a “loss”, in the particular context with which we are concerned, has to be something completely different from a trigger event or the occurrence of an insured peril.

Rather, the “loss” is the immediate consequence of that occurrence or trigger event. It is what happens next and what results from that trigger event: the interruption to the business caused by the operation of the insured peril. Where the quantification of that interruption is arrived at by looking at differences in gross revenue over a defined period, all of the consequences of that interruption must form part of a single loss. It would not be meaningful to suggest that each lost sale of a ticket, or meal, or drink was a separate loss. All of those things, if resulting from a single trigger event, will form part of a single loss.

As such, I found it helpful to think of a “one loss” here as meaning something akin to one “loss calculation”, in the sense of the activity that would need to be performed after an insured risk caused an interruption, in order to determine what, if anything, was owed by the U/Ws.

In the context of BI consequent upon property damage, as I have described, it is clear that the loss adjuster or assessor compares past and present gross revenues during the relevant indemnity period. If there was a new trigger event, there would need to be a further, and separate, calculation, with its own indemnity period. Each would be a separate “loss” for the purposes of the reinstatement provision in the limit clause. It seems to me that the same would be true if the denial of access extension was triggered, and then triggered again by a new “action” preventing or hindering, in some new way, the use of the premises. There would need to be a further, and separate, loss calculation, involving a new indemnity period and a new limit of indemnity.

A “loss”, or “loss calculation”, as I define it here, is therefore not quite the same as a “trigger event” or a “claim”, although it seems to me that there would be a high degree of overlap in a Venn diagram. You could have a trigger event, but no loss. You could have a loss, but no claim. But in the ordinary course, the trigger event, loss and claim will be like 3 dominos in a line, falling one after another, such that it might be difficult in practice to identify much of a gap between them.

In the particular context of BI cover, then, it seems to me that the meaning of “one loss” is arrived at by identifying a trigger event and then understanding how the amount of the indemnity payable as a result of the interruption which is caused by that trigger event will be calculated (i.e. by reference to a comparison of past and present revenue over an indemnity period). That is different from how one might understand the same words in a policy covering loss of oil, or thefts by employees. But that results from the different nature of the cover, not from any difference in the approach taken to construing the policies.

In terms of timing, I should make clear that identifying a new loss calculation does not require the calculation to have been fully performed. To put it another way, it must be possible to carry out a loss calculation and discover that (because of savings made, or alternative earnings, or whatever) there was in fact no loss for which the Cs would be entitled to an indemnity. That would not affect the fact that, if the calculation had shown a loss, that loss would have been subject to its own limit of £2.5m. It is the occurrence of a fresh trigger event and hence the commencement of a new indemnity period, which necessitates a new loss calculation and which seems to me to result in a further “loss” for the purposes of the limit. This is why Mr Kramer’s point about timing does not ultimately assist him. The fact that the loss must ultimately be quantified over the whole indemnity period does not affect the parties’ ability to identify that there has been a trigger event, and perhaps to assess a sum which might be paid on an interim basis. But it does make it difficult to suggest that each individual lost ticket sale, or day of lost ticket sales, represents a separate and freestanding loss.