Business Insurance – How To Avoid A R423m Unpaid Claim

Lewis Group’s R423 million Business Interruption claim has hit a costly procedural wall.

The High Court ruled on the 20 May 2025 that the dispute must be resolved through arbitration, not litigation, as set out in the policy wording. This effectively put the court case on hold. While the insurers had already admitted liability for Lewis Group’s COVID related losses, they maintained that the R1 million sub-limit applied to the business as a whole, not per store as Lewis had argued. The court did not decide who was right about the payout, only that the contract’s arbitration clause must be enforced.

Lewis was ordered to pay the insurers legal costs and now faces a drawn out arbitration process with no certainty of recovering the full amount. The claim is delayed, the litigation has come at significant financial cost the final outcome remains uncertain.

What this case really exposes is the risk of discovering critical policy limitations only after a loss occurs. The client could have avoided this by conducting a detailed pre loss review of the policy wording with a seasoned Risk Advisor, focusing on sub-limits, dispute resolution clauses and the practical application of extensions. A professional and proactive Risk Advisor would have most likely flagged the sub-limit interpretation risk before renewal or placement by clarifying with insurers if all risk addresses need to be stated in the Policy Schedule for the sub-limit and they would have, amongst other things, performed risk stress tests of the practical application of extensions, ensuring the client understood the potential consequences of a group wide sub-limit versus a per location basis and ultimately, ensuring no unpleasant surprises at loss stage.

When last did you objectively examine your own policy wording and insurance cover beyond the comfort of price or the familiarity of a longstanding broker or insurer relationship?