Given Hong Kong's reputation as a thriving and peaceful city, it must have seemed quite strange to many Euromoney readers to watch protestors descend onto parts of the central business district of Hong Kong in September 2014. While certain major roads were blocked by the protestors (making for some news headlines), for the most part business carried on much as usual in true Hong Kong style, albeit at some inconvenience to many.
It was not until mid-December 2014 that the police successfully removed the protestors following certain business owners obtaining injunctions in the civil courts1.
With civil disobedience and protests not uncommon in various cities many businesses are considering their business interruption insurance needs and claims are appearing on insureds' radars.
Business Interruption Insurance
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 was minimal "damage"2 .
(i) Non Damage Denial of Access Endorsement
Over time and due to a number of incidents, where access to a business has been denied but the policy has not responded due to a lack of any physical damage, market cover has developed that provides specific insurance by way of a "non-damage denial of access" extension. The wording of such extensions 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
Some aspects of such a provision merit brief comment.
"access to the Premises being hindered or prevented"
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; for example, "make it difficult for someone to do something or for something to happen".
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 (underground) station below may not be hindered if only one of the entrances is closed.
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" extension, 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 is the result of action by or instructions of the police or other statutory bodies.
In the case of "Occupy Central", the cordoning off of certain areas was the result of protestors, concerned property owners' security or the police. For example, the police cordoned off particular areas to prevent vehicles from inadvertently accessing roads that had no through way because they were occupied by protestors.
During "Occupy Central" there were areas and roads that were cordoned off by protestors only and where the police held back.
"… due to 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 or occupy main roads. 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 court decided that obstruction of a highway was unlawful. In this context a highway is likely to be considered property in the vicinity (albeit owned by 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" extension include:
- Time periods – most extensions 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 such a condition could limit exposure (although, "Occupy Central" lasted some eleven weeks in certain parts of Hong Kong, albeit it appeared to fizzle out for the most part after a few weeks3);
- 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 a protest morphs into something that amounts to a riot or civil commotion. A further exclusion 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 recently seen in certain cities in Asia.
(ii) Loss of Attraction
This has nothing to do with personal appearance. Rather, insurers offer another limb of business interruption cover under a "loss of attraction" extension. For example, such cover could be worded to indemnify against loss arising from:
"interruption of or interference with the Business at any Premises in consequence of accidental physical loss or damage to an Attraction…
a) Attraction shall mean real and personal property in the Vicinity of the Premises which acts as an attraction to the Premises;
b) Vicinity shall mean a radius of  miles of the boundary of the Premises…"
The Loss of Attraction extension is intended to cover business interruption loss caused by (for example) the destruction of an attraction nearby (but not damage to the Insured's premises itself). It would be up to an Insured to identify what the nearby attraction(s) might be. As to the attraction itself, there would need to be physical damage and not merely denial of access to the attraction. In the case of "Occupy Central", which occupied areas near certain shopping malls and business premises, there was little or no damage to surrounding property or any specific attraction. The mere fact that some shops and businesses in the vicinity had their access blocked for a while and some decided to close out of prudence is unlikely to mean that a Loss of Attraction extension is relevant in these circumstances.
Antony's and Denise's combined areas of practice focus on various insurance lines, including professional indemnity and financial lines, property and business interruption and product liability. This article is intended to give general information only. It is not a complete statement of the law. It is not intended to be relied upon or to be a substitute for legal advice in relation to particular circumstances. Smyth & Co operates in a formal association with RPC in Hong Kong. In Hong Kong, solicitors may not claim to be experts in any field of practice or generally.
- See our article in ILO Litigation Hong Kong, 16 December 2015 – "Occupy Central – civil disobedience and civil remedies", Jonathan Cary, Partner, Smyth & Co in association with RPC (http://www.internationallawoffice.com).
- There appears to have been a lot of "street art" or graffiti on roadsides and bridges and the like, albeit contract cleaners removed most of this immediately after the police eventually cleared the protesters. Some street pavements in the vicinity of protests appear to have been a bit damaged.
- During the daytime, certain roads were eerily quiet as most of the few hundred or thousand active protestors went back to work or to their studies, with weekend evenings bringing some back to the occupied areas (nearer "Admiralty" rather than Central, Hong Kong). Numbers were appreciably down when it rained. Pollution levels in Hong Kong rarely appear to have been better. This has caused many to ask whether Hong Kong could adopt certain pedestrian only areas.