In May 2025, the English High Court held that business interruption cover under an infectious diseases extension does not include Covid-19 where the policy defines “disease” as a closed list of specified illnesses not specifically including Covid-19.
The claimants owned and operated various commercial businesses comprising hotel accommodation, spa facilities and restaurants. The claimants (as insureds) concluded a commercial insurance policy with defendant (as the insurer), which incepted on 2 August 2019 and expired on 1 August 2020.
The insurance policy contained an infectious diseases extension to the business interruption section of the policy and provided a limit of indemnity of £100,000. The infectious diseases extension is triggered by interruption to the claimants’ businesses in consequence of closure due to “any human infectious or human contagious Disease”. While “Infectious Diseases” was not defined, the policy contained a definition of “Disease” listing 33 illnesses. Covid-19 was not on the list.
The key question was whether the infectious diseases extension to the business interruption section of the policy extended to losses incurred by the claimants arising from the closure of their commercial businesses between 26 March 2020 (at the latest) and 6 July 2020 as a result of the Covid-19 restrictions imposed by the UK government.
The claimants argued that the wording of the infectious disease extension, particularly the phrase “any human infectious or human contagious Disease”, should be read broadly to include Covid-19. The claimants further contended that AIDS is not among the 33 listed diseases in the definition of “Disease”, yet the infectious disease extension expressly excludes “Acquired Immune Deficiency Syndrome [AIDS] or an AIDS-related condition”, thereby indicating that the definition of “Disease” was not exhaustive when determining the scope of cover under the infectious disease extension.
The defendant contended that the definition of “Disease” in the infectious disease extension is a closed list and thus limited the grounds on which cover for business interruption can be claimed. Therefore, the defendant contended, there is no cover under the policy for business interruption losses arising from Covid-19 and refused to indemnify the claimants on this basis.
The court remarked that an insurance policy, like any other contract, must be interpreted objectively by asking what a reasonable person, with all the background knowledge that would reasonably have been available to the parties when they entered into the contract, would have understood the language of the contract to mean.
The court ruled that Covid-19 did not fall within the scope of the infectious disease extension, as the definition of ‘Disease’ is an exhaustive closed list limited to the 33 specified illnesses.
The court’s reasoning was that the definition of “Disease” was exhaustive, particularly as the definition began with the word “means” (as opposed to “includes”), and that interpreting the extension as open-ended would fundamentally alter the underwriting risk. The court was not persuaded by the argument based on the AIDS exclusion as creating ambiguity in the definition of “Disease”. Commercial common sense and the natural meaning of the words prevailed in the court’s interpretation.
When interpreting insurance policies, courts in England and South Africa apply the natural and ordinary meaning of the words. Insurance policies should be carefully drafted to ensure that the scope of cover accurately reflects the risks intended to be insured and that exclusion limits the covered risks.
Carbis Bay Hotel Ltd and Another v American International Group