The COVID-19 pandemic has triggered an increasing number of contested Business Interruption Insurance claims between Policyholders and Insurers worldwide.

In the USA alone, over 1,250 Court cases have been commenced since March 2020, with policyholders nation-wide claiming insurance coverage for Business Interruption losses, both as individual Plaintiffs and as part of larger class actions.

Many of these US claims have been filed by restaurants, bars, theatres, retailers, and casinos, with hospitality and retail being two of the business sectors most affected by the pandemic.

Most of the US Court decisions published to date have favoured Insurers, based on standard Policy definitions and exclusions, but a number of claims have survived summary motions to dismiss, and will therefore go to trial.

Insurance Policies governed by Cayman Islands law

As losses continue to mount locally for some Cayman Islands’ businesses (including hotels, tour operators, dive operators, and restaurants that have been forced to close), policyholders and Insurers with policies governed by Cayman Islands law will want to review the wordings of their own Policies, with the benefit of expert legal advice.

Although Cayman Islands law on the interpretation and enforcement of insurance policies largely follows English law, there are certain local variations, taking into account:

As losses continue to mount locally for some Cayman Islands’ businesses (including hotels, tour operators, dive operators, and restaurants that have been forced to close), policyholders and Insurers with policies governed by Cayman Islands law will want to review the wordings of their own Policies, with the benefit of expert legal advice.

Although Cayman Islands law on the interpretation and enforcement of insurance policies largely follows English law, there are certain local variations, taking into account:

  • local Cayman Islands legislation,
  • the local regulatory landscape for the conduct of insurance business,
  • local case law1,
  • the Cayman Islands’ Government’s regulatory response to the COVID-19 pandemic; and
  • the procedural mechanics for litigation, arbitration and mediation in the Cayman Islands.

There have been two recent judgments from the English Courts, which should be of particular interest to the local Cayman Islands’ insurance market.

1 See, for example, Cayman Islands cases such as Toby v Allianz Global Risks US Insurance Co, Banks v Insurance Company of West Indies, Zeller v British Caymanian Insurance Company Ltd, McLaughlin v American Home Assurance Company, and Jackson v Cayman Insurance Company.

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