In this judgment the insured restaurant argued that the requirement in the murder, suicide or disease extension that the interruption or interference with the insured business be caused by damage did not require physical damage.

It was common cause that there had been no physical loss or damage to the insured premises or property used by it at those premises.

The court said that the overall contractual scheme was for basic cover tied to physical damage.

At the time of the contracting, non-damage cover was available in addition to the standard business interruption cover which is typically contingent on physical damage. The insured obtained cover through an expert intermediary and had access to advice and available cover before concluding the policy. 

The relevant disease extension used the express term “caused by damage” where the bold wording had been clearly defined to mean physical loss, physical damage or physical destruction.

To read the reference to damage to mean “the effect of the perils” as the claimant argued would be to read the clauses as if the words “caused by damage” and “in consequence of the damage” had not been agreed. That, said the court, would entail re-writing the policy contrary to the parties’ express agreement and the established approach to contractual construction.

Where a word is expressly defined by the contract (as in this case) the court will give effect to the agreed definition and it would be highly unusual to depart from it. The express definition was clear and workable and there was no basis to depart from it.

The court said that while non-damage cover that was not contingent on physical damage would have been significantly wider and provided better cover against the closures caused by Covid-19, the clause was not to be construed or re-written with hindsight as to subsequent events.

The outcome in South African law would in principle be no different.