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The outbreak of COVID-19 has raised a lot of questions around insurance coverage regarding related losses, exposures, and liabilities, with insurers refusing to pay out claims, saying that the pandemic is not an insurable event.

In the recent ruling by the Cape High Court in the case of Café Chameleon CC v. Guardrisk Insurance Company Ltd., the court had to decide whether or not there was a cause for cover under the business interruption section of the insurance policy, for loss suffered “as a result of the interruption caused by the COVID-19 pandemic and the resultant promulgation and enforcement of the lockdown Regulations under the Disaster Management Act”.

The court ruled in favour of Café Chameleon, citing the business interruption section of the insurance policy, which provided cover for loss as a result of “interruption or interference with the business due to (e) notifiable disease occurring within a radius of 50 km of the premises”.

Café Chameleon is not the only business in the hospitality industry to challenge the refusal to pay out insurance claims following the months of interruption during the national lockdown.

BusinessTech reports that in a Cape High Court judgement on Tuesday, Santam has also been court-ordered to pay out business-interruption claims to Ma-Afrika Hotels and Stellenbosch Kitchen, which between them have business interruption cover worth R122 million.

Insurance Claims Africa (ICA), a claims-preparing company that has worked with Café Chameleon, Ma-Afrika Hotels, and Stellenbosch Kitchen, called out other insurers refusing to pay.

“We all know that this was a test case, not just for Santam but for all insurers refusing to pay these claims,” Ryan Woolley, ICA chief executive officer, said in an emailed statement.

Via TimesLIVE, the ICA is currently representing 750 hospitality businesses struggling to claim insurance.

“By settling valid claims expeditiously, they have the opportunity to contribute to the survival of businesses in this critical sector, and to the preservation of thousands of jobs,” he said.

“Failure to do so will ensure they are remembered in history as companies that contributed directly to the demise of thousands of businesses and jobs during the country’s worst economic and social crisis.”

Guardrisk is appealing the High Court decision and will be heard in the Supreme Court of Appeal in Bloemfontein on Monday.

It could be a tough couple of months for South African insurance companies.

[sources:businesstech&timeslive]