Briefing

Rectification refused in claim for Covid-19 BI losses

In a judgment handed down on 29 June 2026, Mr Justice Andrew Baker considered a claim brought by fifteen policyholders (the “Claimants“) against various Generali entities (the “Insurers” or the “Defendants“) seeking coverage for substantial business interruption (“BI“) losses sustained during the Covid-19 pandemic (CP Holdings Ltd & Ors v Assicurazioni Generali SpA & Ors [2026] EWHC 1520 (Comm)). The Court’s main considerations at the preliminary issues hearing were a rectification claim brought by the Claimants in respect of the 2019 Global Policy and certain exclusions in the policy terms.

Background facts

The Claimants operated hotels, spas, restaurants and offices in the UK, Czechia, Romania, Slovakia and Hungary. As a result of the pandemic, the Claimants estimated their collective loss of revenue was approximately €400 million, of which they sought to recover €160 million under four insurance policies. The four policies included a 2018 Global Policy and 2019 Global Policy issued by Assicurazioni Generali SpA covering business premises across the UK, Czechia, Romania, Slovakia and Hungary; a Hungarian Policy issued by Generali Biztosító Zrt covering only the fourteenth and fifteenth claimants; and a Romanian Policy issued by Generali România covering only the sixteenth claimant.

Rectification and the Conformity Term

The Claimants primarily sought rectification of the 2019 Global Policy, alleging that, on renewal, the parties agreed through the broker that cover would be no less favourable than under the 2018 Global Policy, with the earlier terms prevailing where they were more beneficial to the insured (the “Conformity Term“). However, the 2019 Global Policy was issued without a Conformity Term.

Mr Justice Baker considered the authorities on rectification claims and referred to Lord Justice Hobhouse’s judgment in Britoil plc v Hunt Overseas Oil Inc [1994] CLC 561 where he found that it was “fundamental that the intention of the parties as stated in [a final written contract which they have made] is only to be displaced upon the most cogent evidence”.¹

Baker J did not need to ultimately decide the point, but he considered whether that high threshold was appropriate where the document to be rectified was a policy issued unilaterally by the insurer, rather than a negotiated final written contract of the kind Lord Justice Hobhouse had in mind in Britoil.

On the facts, this distinction did not matter. Baker J found that although the Conformity Term had been proposed in pre-renewal communications and the underwriter appeared to be willing to agree to the clause, it was never formally agreed. On an objective reading of the exchanges, the Claimants’ broker had only pursued a specific conformity provision relating to conditions precedent and had not pressed for a general Conformity Term. As the renewal had already been concluded by email exchange, Baker J concluded that nothing within the parties’ communications indicated an intention to be bound beyond the agreed renewal terms.

Baker J aptly summarised his conclusion as follows: “[r]ectification cannot be founded upon what might have been, but was not in fact, agreed; it always requires a clear accord that has not been given by the document to be rectified.”

Baker J’s decision exemplifies the high evidential hurdles that parties must meet in support of a claim for rectification; very clear evidence of the true agreement is required before the Court will grant a rectification claim.

The “Atypical Pneumonia” Exclusion Clause

Following the failure of the rectification claim, the Claimants could not rely on the more favourable 2018 wording and they accepted that the 2019 Global Policy’s infectious disease exclusion excluded their pandemic-related losses. As such, the construction of the 2018 Global Policy’s Atypical Pneumonia Exclusion Clause which excluded “Severe Acute Respiratory Syndrome (SARS), Avian Flu, and/or atypical pneumonia, or fear of threat” was academic, but Baker J addressed it given the extensive expert evidence provided on the topic.

The question for the Court was whether Covid-19 fell within the meaning of “atypical pneumonia“, a term which has various meanings in different contexts. The Court found that in the context of the 2018 Global Policy, Covid-19 did not fall within the meaning of atypical pneumonia.

The Hungarian and Romanian local policies

Baker J considered the BI cover under the local Hungarian and Romanian policies. In both instances, the Court found that cover was only available as an extension of property damage cover and did not apply on a freestanding basis.

The BI losses suffered arising from government restrictions due to the pandemic were not covered. In any event, the policy excluded losses caused by “authority restrictions on reinstatement and operation, or any other dilatory measures” and thus the losses arising from the government restrictions fell within the exclusion.

In any event, both policies contained exclusions that captured losses resulting from government restrictions or operations which ceased for reasons “other than” insured property damage. Accordingly, the Claimants’ pandemic-related losses were excluded under both local policies.

Second judgment

In a second judgment handed down on 8 July 2026, Baker J considered the proper construction of the limits and indemnity provisions in the 2018 Global Policy (CP Holdings Ltd & Ors v Assicurazioni Generali SpA & Ors [2026] EWHC 1717 (Comm)).

The Court rejected the Insurers’ argument that the €10 million Disease Clause sub-limit operated as an annual aggregate policy limit. Instead, the Court held that both the €150 million Policy Loss Limit and the €10 million Disease Clause sub-limit applied on an “each and every loss” basis, rather than as annual aggregate limits in the context of Covid-19 BI losses. The insured BI loss suffered by any one business as declared to the insurer by the annual spreadsheet (in which the parties listed the businesses/locations insured, with insured values for each) would be a separate loss from the insured BI loss suffered by any other such business, even where the same pandemic and government restrictions were the underlying cause.

Baker J also held that the Disease Clause provided cover for BI losses for a maximum indemnity period of 36 months commencing when the results of the business in question were affected as a result of an insured peril.

Consequently, had the Claimants succeeded on rectification, the 2018 Global Policy would not have imposed an annual aggregate limit on Disease Clause claims.

Conclusion

This case offers a helpful reminder for insurers, brokers and policyholders: the policy terms agreed following renewal communications must clearly record the bargain and there is a high bar which must be met to rectify that. Any proposal, agreement in principle or a statement that wording remains “to be agreed” are unlikely to support a successful rectification claim and care should be approached with such statements as it may not indicate a concluded contract. If continuity of cover depends on a Conformity Term, its scope and wording should be settled expressly before the inception or renewal.

Nina Armangue I Jubert, Trainee Solicitor, assisted in the preparation of this briefing.

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