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