A Significant Judgment On Claims-Made Professional Indemnity Policies And Late Notification

Facts

The Plaintiffs operated restaurant businesses and appointed the Defendant, an insurance broker, to procure commercial insurance on their behalf. On 4 June 2019, the Defendant procured policies from Renasa Insurance Company Ltd, but these critically did not include an extended business interruption clause covering losses from infectious disease outbreaks.

When COVID-19 struck, the Plaintiffs suffered substantial losses due to lockdown measures. The Supreme Court of Appeal in Guardrisk Insurance Co Ltd v Cafe Chameleon CC held that insurers were obliged to indemnify under extended business interruption clauses, but the Plaintiffs' policies lacked such a clause.

In January 2021, the Plaintiffs complained that the Defendant had breached its mandate and issued letters of demand. The Defendant forwarded these demands to the Third Party on 1 July 2021.