Jurisdiction(s):
United Kingdom

Liberty Mutual v Bath Racecourse: Court of Appeal on composite policy limits and deduction of furlough payments in COVID-19 business interruption (England and Wales)

Published on: 17 March 2025

Published by a LexisNexis Insurance & Reinsurance expert

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Article summary

Liberty Mutual Insurance Europe Se and other companies v Bath Racecourse Company Ltd (and 21 other Claimants listed in Appendix 1 to the Particulars of Claim) and other cases [2025] EWCA Civ 153

What are the practical implications of this case?

Composite policies are often adopted as an efficient way to cover multiple insured parties, especially members of corporate groups, within a single policy instrument. The Court of Appeal’s reasoning that such a policy operates as a bundle of distinct insurance contracts between the insurer and each insured, together with its ruling here that each insured enjoyed a separate limit of indemnity, signals that limits in composite wordings will usually be treated as attaching to each individual contract, unless the language expressly provides that the limit is aggregated across all insureds under the composite arrangement. The court’s finding that insureds had to give credit for furlough monies is expected to carry broad market consequences for COVID-19 BI claims. The Court of Appeal’s outcome turned on the construction of the relevant ‘savings’ clauses within the policies before it. It is, however, likely to be of significance to many other insureds who possess similarly drafted provisions in their respective policy wordings therein...

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