The Netherlands

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The Netherlands

Has the official regulator/authority intervened to help resolve contractual uncertainty around the validity of BI claims?

No.

The Autoriteit Financiële Markten (AFM) regulates insurers and other financial service providers, but does not interfere with civil law matters pertaining to policy coverage.

Unsurprisingly, the AFM has not released a statement about contractual uncertainty around the validity of BI claims.

However, the Dutch market seems broadly unanimous: damage due to the coronavirus is in principle not covered by BI insurance.

The Dutch Association of Insurers specifically points out that in this case the government is taking measures to help businesses (https://www.verzekeraars.nl/verzekeringsthemas/nieuwe-risicos/coronavirus).

Do insurance policies in your jurisdiction generally restrict BI to losses directly resulting from physical damage?

Yes.

In principle, business damage is only covered by BI insurance if there is material damage to insured property (such as real estate or inventory), caused by a risk specified in the policy conditions (“named peril”).

In general, damage due to BI as a result of the coronavirus does not qualify as material damage to property, or as a named peril, and is therefore not covered.

It could be possible, however, that insurance policies do cover losses that are not directly related to material damage, if the policy includes an additional “Communicable Disease” clause. This can be illustrated by the two cases discussed hereafter. However, it must be noted that such policies form an exception to the general rule and are therefore not common in the Dutch insurance industry.

Are there any court proceedings currently dealing with the validity of BI claims?

Yes.

As of July 2022 we are aware of two cases in which the insured challenged a denial of BI insurance coverage in court. These cases will be discussed briefly in later sections.

Furthermore, it is possible that there might be cases currently still pending - the existence of a case is generally not known to the wider public before a judgment is rendered (unless the case is picked up by the media).

Have any judgments been given that deal with BI claims in relation to the current COVID-19 pandemic or other contagious/infectious diseases?

Yes. Two relevant judgments have been published:

VAB (Hema)/ AIG
First instance: ECLI:NL:RBROT:2021:4734.
Appeal: ECLI:NL:GHDHA:2021:2497.
The policy includes an additional “BI without material damage” clause, which contains among other things a “Communicable Disease” inclusion, stating that loss of profits arising from compulsory closure of the business location by order of the government would be covered up to an amount of 25.000 EUR.

The insured claimed that they were entitled to coverage under the Communicable Disease inclusion. The insurer disputed this by arguing that coverage should only be provided if the disease had occurred at the place of business and that in this case, the closing of the place of business was not a direct consequence of covid, but rather the consequence of governmental measures. The court (both in first instance and appeal) sided with the insured. The court gave precedence to the literal wording of the clause and argued that the insured was entitled to coverage, since the clause does not indicate that there must be a link between the occurrence of the damage and the location. The court also considered it important that the clause was an explicit extension of the cover that was added to the existing policy as the result of a terrorist attack on a mall in the Netherlands which prompted the closure of other malls around the country.

Zuiderduin/ NN (ECLI:NL:RBROT:2022:92). This case is similar to the one above. The insured (in this case: three hotels) were forced to temporarily close their doors due to covid restrictions imposed by the government. Similar to the case above, the policy included a clause for 'Special Additional Costs for Hotel Accommodations', under which the policy also covered for the loss of operating costs, if the company had to be temporarily close by order of the competent public authority, as a result of infectious diseases or quarantine regulations. Just as in the previous case, the insurer disputed the claim under the clause because of the absence of a direct link between the damage and the business location. The court ruled in favour of the insured and argued that the circumstances which forced the business to close was the result of restrictions imposed by the government and this was , sufficient to grant coverage. The court also considered it important that the Communicable Disease clause exceeds the policy conditions and provides for additional coverage for business interruption/extra costs over and above the coverage provided by the policy conditions. Furthermore, the court held that if the insurer had not intended to cover the consequences of a lockdown due to a pandemic, it could and should have included an explicit exclusion in the policy.