In this English court judgment, the parties were in dispute whether the Indemnity Period begins with the commencement of the interruption or interference with the insured business or with the occurrence of the Covered Event.
The definition of Indemnity Period in the policy read:
“Indemnity Period means the period of time during which interruption or interference to the Insured’s Business occurs as a consequence of the Covered Event beginning with the occurrence of the Covered Event and ending not later than the end of the Maximum Indemnity Period thereafter.”
The court said that a proper construction of the words used is that the Period of Indemnity starts with the commencement of the interruption or interference which results from the Covered Event. That gives effect to the words “the period of time during which the interruption or interference …occurs.” It avoids the conclusion that there is a period of time which counts as the Indemnity Period which is not within the period of time during which there is interruption or interference.
That interpretation made better commercial sense, said the court, especially in the context of a policy wording that provides cover for business interruption arising from notifiable diseases. The court said that the occurrence of a notifiable disease in the Vicinity may not have been known for some time and before any interruption or interference.
“It is difficult to see why the parties should have intended that the length of the Indemnity Period which occurs after the start of interference with the business should depend on whether there is a gap between the Covered Event and its effect in interfering with the business.”
The court said that the words “beginning with the occurrence of the Covered Event” can sensibly and without manipulation be read as saying that the Indemnity Period will begin no earlier than the Covered Event (but cover for losses may begin later).