Introduction

Picture the scene in the coming weeks; “waves”  of protestors descend on Central, Hong Kong  to set up camp as part of the “Occupy Central”  movement. As a result, the Police and/or other  third parties cordon off areas of Central. When  you reach Central to purchase that new watch  or visit your favourite restaurant, you discover  that access is hindered or prevented. With each passing hour of protest affected businesses suffer an increasing loss of trade. Are insurers expected to pick up the tab under business interruption insurance?

Denial of Access Endorsement

A standard All Risks Property policy will not respond to business losses arising in situations  where there has been no physical damage to  the insured’s property. The standard denial of  access extension available to the insured seeks  to overcome this issue by focusing on damage  in the “vicinity” as the trigger. That said,  such extensions do not assist in an “Occupy  Central” situation where there is unlikely to  be any “damage”. To counteract this, the  market provides specific cover by way of a  “non-damage denial of access” endorsement.

The wording of a typical “non-damage denial  of access” provision raises some interesting  coverage points in respect of incidents like  “Occupy Central”. An example of such a  provision is:

“Loss as insured by this Section is extended to  include loss resulting from the interruption or  interference with the Business in consequence  of access to the Premises being hindered or  prevented by the action or instructions of the  police or other statutory bodies in closing  down or sealing off the Premises or property  in the vicinity of the Premises due to:

(a)…

(b) unlawful occupation of the Premises or  other property in the vicinity by third parties

(c)…”

“access to the Premises being  hindered or prevented”

Clearly, access being hindered is a lower  threshold than access being prevented.The term “hindered” has not been considered in this context by the courts in Hong Kong. Therefore, in accordance with established  insurance principles, “hindered” should  be given its ordinary meaning; “make it  difficult for someone to do something or  for something to happen”. In this context,  “hindered” is likely to be construed widely by  the courts when applied to any given facts.

When determining whether access has been  “hindered”, a consideration could be the  number of access routes to the premises. For example, access to a shop in a building that  has several entrances and an entrance from  a metro station below may not be hindered if  only one of the entrances is forced to close.

The fact that several thousand people might  take to the streets making movement  difficult and access to certain parts of the  city impractical is irrelevant for cover, unless  access to the insured’s premises is actually hindered or prevented.

“by the action or instructions of the  police or other statutory body”

A key feature of a “non-damage denial of  access” endorsement, and a requirement to  trigger cover, is that the loss must arise from  the action or instruction of the police or a  statutory body. It should not automatically be  assumed that if an area is cordoned off it has  been done so by the action or instructions  of the police or other statutory bodies. For  example, if the management of a shopping  centre take the decision to cordon off an  entrance as a preventative measure that will  not trigger cover. An important consideration  will, therefore, always be what is the reason  for access being hindered or denied.

“unlawful occupation of the Premises  or other property in the vicinity”

The main consideration in respect of this  limb is whether there has been “unlawful  occupation”. In general, protests tend to  follow/occupy roads (say, for example,  Chater Road, Central). In the case The  City of London v Samede [2012] EWHC  34 (QB) (a protest in London around St  Paul’s Cathedral by an organisation dubbed  “Occupy London SX”), the judge ruled that  obstruction of a highway was unlawful. Absent  “property in the vicinity” being a defined term,  a highway might be considered property of the Government.

Limiting the scope of cover

Additional factors which can impact on  the scope of cover available under a  standard “non-damage denial of access”  endorsement include:

  • Time periods – Most endorsements of  this nature will include a time deductible  (ie 12 or 24 hours). Bearing in mind the  majority of protests tend to last a day or  less (although “Occupy Central” could test  this) such a condition could limit exposure
  • Definition of vicinity – In order to limit  what is considered to be “other property  in the vicinity”, a geographical radius could  be included in a definition of vicinity to  restrict the scope of cover
  • Exclusion – A potentially relevant exclusion  in the context of considering cover for  protests and demonstrations is “strike,  riot and civil commotion”. The extent to  which such an exclusion may bite will be  fact specific, depend on precise wording  and whether the protest morphs into  something that amounts to a riot or civil  commotion. A further option could be that  all business interruption losses that flow  from protests are excluded. This might be  considered if there is a significant risk of  on-going protests similar to those seen in  certain Asian cities this year

Summary

When considering cover under a  “non-damage denial of access” provision,  careful consideration must be given to  the facts. While the wording of a typical  provision may be generally (on the face of it)  self-explanatory, it often transpires that, on  further investigation, all is not quite so clear.