Hong Kong

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


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

Having said that, there have been ongoing public discussions and media coverage regarding the potential issues surrounding BI insurance policies.

No conclusive answer as this will depend on how the insurance policies are drafted and in particular their respective wordings.

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

No related court proceedings at the moment that we have been made aware of.

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

The Hong Kong Courts were asked to consider the issues on the interpretation of BI insurance policies and the concept of 'notifiable diseases' in relation to Severe Acute Respiratory Syndrome (SARS) in the case of New World Harbourview Hotel Co. Ltd v ACE Insurance & Ors [2012] HKEC 264.

The New World Harbourview case is a landmark judgment given by the Hong Kong Court of Final Appeal in relation to a "notifiable human infectious or contagious disease".

The case related to a claim by the Plaintiffs (the owner of convention centres, hotels, carparks and related business) to recover losses sustained from interruption of their business caused by the outbreak of SARS in 2003 from the Defendants, their insurers.

The critical provision regarding the loss of coverage provided under the policy was in the following terms:

"This Policy is extended to insure actual loss sustained by the Insured, resulting from a Reduction in Revenue and increase in Cost of Working as a result of murder, suicide, infectious or contagious disease, food or drink poisoning or Contamination, and closure by a competent authority due to vermin or pests all occurring on the Premises of the Insured or of notifiable human infectious or contagious disease occurring within 25 miles of the Premises."

Several key principles can be taken from this unanimous judgment in favour of the insurer:

1. To interpret the BI policy, consideration must be given to both the context and the contract as a whole, not only a particular provision. As a general principle the court will read the words and expressions of the contract as ordinary commercial people would understand them;

2. When construing the expression "notifiable human infectious or contagious disease", a commercial person would look to medical understanding and expect and intend their words to be understood accordingly. Therefore, in line with the meaning of the word "notifiable" in most leading dictionaries (including the Oxford English Dictionary Online), this phrase should be understood as meaning an infectious or contagious diseases which is required by law to be notified to an authority;

3. On 27 March 2003, it became mandatory to notify the HKSAR Government of SARS cases under the then Quarantine and Prevention Diseases Ordinance (Cap. 141). Therefore, 27 March 2003 was the date on which coverage for SARS commenced under the relevant BI policies. Any loss caused by SARS before that date was caused by a disease which was not notifiable.

Name of regulator, websites and articles of interest

The Insurance Authority:  https://www.ia.org.hk/en/index.html

What effect might the UK’s Business interruption insurance test case have on similar cases over coverage in Hong Kong?