Liberty Mutual has lost the core coverage fight in a fresh High Court ruling on Covid-19 business interruption claims brought by UK small businesses.
Christopher Hancock KC handed down judgment on May 20, 2026 in five joined claims brought against Liberty Mutual Insurance Europe SE by pubs, hotels, hair salons, cafes and other SMEs insured under the ARO Retail Package wording. The trial dealt with preliminary issues only.
At the heart of the case was Extension 2(a), which covers business interruption following "compulsory closure by a public body authorised to prevent or restrict access to the Premises arising from… discovery of a notifiable human infectious or contagious disease at the Premises." The maximum indemnity period is three months.
Liberty Mutual said "discovery" required a person's infection to be apparent through diagnosis and known to someone before the closure. The claimants said it meant the same thing as "occurrence" - a person being at the premises while infected, whether or not they had symptoms or a diagnosis.
Hancock KC came down on the claimants' side on the points that mattered. He ruled that the public body ordering closure did not need to know about the specific case at the premises. It was enough that the case, combined with other cases in the area, caused the closure. He also held that the Covid case could be discovered either before or after the closure, as long as it occurred between the date Covid became notifiable in the relevant territory and the date the doors shut.
That finding, the judge said, made the debate over the precise meaning of "discovery" less important. He declined to rule on how a discovery has to be evidenced, saying the question was not before him.
The decision applies the reasoning of the Supreme Court in the FCA Test Case and the Court of Appeal in the LIEC case to a "discovery" wording, which the judge noted had not previously been considered by the court.
On late notification, Liberty Mutual had more success. The judge ruled that General Condition 5 was a condition precedent to liability. The clause requires the insured to "immediately advise" the company on the happening of any event which could result in a claim.
The claimants said no notification was needed because the pandemic and the closures were public knowledge, and that in any event the trigger was the Supreme Court ruling in January 2021 or the Court of Appeal ruling in LIEC in September 2024. Hancock KC rejected the idea that court decisions were themselves "events" that triggered notification. The clause, he said, was "directed to factual events."
But he also rejected Liberty Mutual's position that the relevant event had to be the March 2020 closures. He held that notification was due within the required period after the insured became aware of a Covid case at the premises within the relevant window. "Notification must therefore be very rapid," he said.
Liberty Mutual had been prepared to treat any notification made within 2020 as in time but argued that notifications from January 2021 onwards did not meet General Condition 5.
The claimants also argued estoppel. They pointed to denial letters from Liberty Mutual's agent Davies Claims Solutions and from solicitors DAC Beachcroft and Clyde & Co, none of which mentioned General Condition 5. The late-notification defence first appeared in the Defences.
Hancock KC dismissed that plea. He found no unequivocal representation in the Davies letters and said the position was "even clearer" in the solicitors' letters, which contained a general reservation of rights.
The ruling is on preliminary issues. Factual disputes about each claimant's notification date were not resolved at this hearing.
