The UK’s Broad Interpretation of Governmental Action in COVID-19 Business Interruption Cases is Rejected by American Courts


By: Lee Whatling

Last month, the Supreme Court of the United Kingdom clarified the applicability of 21 sample insurance policy wordings to business interruption losses resulting from the COVID-19 pandemic and actions taken by UK public authorities in response to the crisis. One of those policies covered: losses resulting solely and directly from an interruption to your activities caused by your inability to use the insured premises due to restrictions imposed by a public authority….

The Supreme Court ruled that an instruction from a public authority may amount to a “restriction imposed” when it is expressed in mandatory and clear terms to indicate that compliance is required “without the need for recourse to legal powers.” This holding broadened the lower court’s narrower determination that “restrictions imposed” are only those which carried the force of law through statute, as opposed to mere instructions by the government.

However, the majority of American courts are rejecting the broad interpretation adopted by the UK court. For example, the Northern District of Georgia in Henry’s La. Grill v. Allied Ins. Co. of Am., No. 1:20-CV-2939-TWT, 2020 U.S. Dist. LEXIS 188353, 2020 WL 5938755 (N.D. Ga. Oct. 6, 2020), interpreting different language, rejected coverage on the ground that the Georgia Governor’s Executive Order included no clear substantive provision prohibiting access to businesses.

As the pandemic evolves, it is important to assess any communication from a public authority regarding COVID-19 restrictions to determine, for coverage purposes, whether such communications have the force of law or are merely “instructions,” “recommendations,” or “advice.” Based on the decisions thus far, it appears unlikely that American courts will adopt the UK’s more insured-friendly approach.

For more information, please contact Lee Whatling at

Additional Information:

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