Household Buildings Decision Reference 2023-0160

• Case Outcome: Partially upheld
• Subject Matter: Household Buildings
• Reference: 2023-0160
• Date: 08 August 2023
• Finantial Sector: Insurance
• Conducts Complained Of: Claim handling delays or issues

Decision Ref:

2023-0160

Sector:

Insurance

Product / Service:

Household Buildings

Conduct(s) complained of:

Claim handling delays or issues

Outcome:

Partially upheld

LEGALLY BINDING DECISION OF THE FINANCIAL SERVICES AND PENSIONS OMBUDSMAN

The Complainant, a landlord, held a Commercial Property Owners Insurance Policy with

the Provider. The policy period in which this complaint falls, is from 8 June 2019 to 7 June

2020. This complaint concerns the Provider’s declinature of the Complainant’s claim to the

Provider, for loss of rental income from his tenant.

The Complainant’s Case

The Complainant, by way of his Representative, notified the Provider by email on 27

March 2020 of a claim for loss of rental income when his tenant was unable to pay, as a

result of the tenant’s temporary closure arising from the government measures introduced

to help curb the spread of the coronavirus (COVID-19).

In making this claim, the Complainant relies upon the following ‘Infectious Disease

Extension’ policy wording contained in Section 2, ‘Rental Income’, at pg. 17 of the

applicable Commercial Property Owners Policy Document (‘the Policy Document’):

“The underwriters shall indemnify the Insured in respect of Damage resulting from

interruption of or interference with the Business during the Indemnity Period

following;

a) any human infectious or human contagious disease (excluding Acquired Immune

Deficiency Syndrome (AIDS) or any AIDS related condition) an outbreak of which

the local authority has stipulated shall be notified to them manifested by any

person whilst in the Premises or within a 25 (twenty five) miles radius of it”.

- 2 -

/Cont’d…

Following its assessment, the Provider-appointed Loss Adjuster wrote to the Complainant’s

Representative on 15 July 2020 to advise that it was declining the claim, as follows:

“The spread of Covid-19 is unprecedented and we understand this is a particularly

challenging and difficult time for [the Complainant].

We understand that the tenant…has ceased rental payments due to enforced

closure/reduced opening hours/ poor trading conditions.

From our review, and understanding of the position, [the Complainant’s] claim

arises out their tenant’s inability to pay rent, rather than being a loss directly

related to the Covid-19 pandemic. As such there is no direct extension of cover for

this claim under the policy and therefore no insured event has arisen.

For completeness, we have reviewed the policy and note that the core business

interruption cover in their policy responds to physical damage to property at the

premises resulting in an interruption of or interference with the business. As Covid-

19 does not cause physical damage to property there is, unfortunately, no cover

under this section of your policy as no peril has arisen …

The Murder Suicide or Disease Extension is as follows: …

‘The Underwriters shall indemnify the Insured in respect of Damage resulting from

interruption of or interference with the Business during the Indemnity Period

following;

a) any human infectious or human contagious disease (excluding Acquired Immune

Deficiency Syndrome (AIDS) or any AIDS related condition) an outbreak of which the

local authority has stipulated shall be notified to them manifested by any person

whilst in the Premises or within a 25 (twenty five) miles radius of it …

We note there was no covid-19 outbreak on the premises but there may have

potentially have been a case within a 25 miles of them. Said potential case(s)

however were not the reason for non-payment of rent and therefore are not

considered to be ‘Damage resulting from interruption of or interference with the

Business’.

Furthermore, this policy also specifically excludes, under the General Exclusions

section;

‘4. Contamination and Pollution Exclusion

a) This Policy shall not cover any loss or Damage due to contamination, sooting,

deposition, impairment with dust, chemical precipitation, poisoning, epidemic

and disease including but not limited to foot and mouth disease, pollution,

adulteration or impurification or due to any limitation or prevention of the use

of objects because of hazards to health’