Hospitality industry holds insurance giant accountable


Thomson Wilks Inc represented Ma-Afrika Hotels and Stellenbosch Kitchen in their claims against Santam for business interruption cover under its policies of insurance. The application was heard in the Western Cape High Court on 1 September 2020, by a full bench lead by DJP Goliath.

The group holds similar policies of insurance with Santam for its different trading entities, all containing cover for business interruption, defined as:

Loss as insured by this Section resulting in interruption or interference with the Business due to:

  1. (a)  ...
  2. (b)  Notifiable Disease occurring at the Premises or attributable to food or drink
  3. supplied from the Premises
  4. (c)  ...
  5. (d)  Notifiable Disease occurring within a radius of 40 kilometres of the Premises
  6. (e)  ...
  7. (f)  ...
  8. (g)  ...”.

The section continues by defining “Notifiable Disease”, which “shall mean illness sustained by any person resulting from

  1. (i)  . . . , or
  2. (ii)  Any human infectious or human contagious disease an outbreak of which the
  3. competent local authority has stipulated shall be notified to them

Excluding ...(AIDS) or an AIDS related condition”.

On 11 March 2020 and 16 March 2020 respectively, the first confirmed cases of Covid-19 occurred within the radial limit stipulated in the policies. The applicants proceeded to submit claims to Santam to be indemnified under its insurance policies for its losses of revenue. Santam took the view that the clause only becomes operational in instances where there was a recorded case at the premises. Therefore, where the applicants could show such an event, the claim was accepted. However, the indemnity period was then curtailed to the date of the commencement of the national lockdown. In respect of the remainder of the claims and despite accepting that there were recorded cases of Covid-19 within the applicants’ radial limit, Santam rejected the claims in toto stating, inter alia, that ... “none of the applicants’ losses were caused by the notifiable disease within the 40 km radius. Instead, the loss.... is as a result of the lockdown and/or general concern or fear of the public”

As it soon as it became clear that the tourism and hospitality industry would be one of the hardest hit by the pandemic, Santam and other insurers persisted with their repudiation of the applicants’ and other parties’ claims and indicated that they would seek resolution from the

courts. The applicants’ case became a matter of national importance and the eyes of the country turned to the outcome of this landmark case.

The group joined forces with Insurance Claims Africa, who represents over 700 businesses in the tourism and hospitality industry, and announced that the legal team instructed by Anel Bestbier of Thomson Wilks Inc would be led by Advocates Jeremy Gauntlett QC SC together with Mike van der Nest SC, Sean Rosenberg SC, Guy Elliott SC and Porchia Long and Jason Mitchell.

The applicants secured a judgement yesterday in the Western Cape High Court which turned an otherwise impregnable insurance industry on its head. The implications of the judgement for the insurance industry and consumers are far reaching. The judgement holds the insurer liable to pay out claims for losses suffered as a result of the occurrence of COVID-19 within the radial limit of the policy and creates a precedent for other claims such as this. The court further held that the indemnity period under the specific wording of the applicants’ policy is 18 months (and not 3 months as suggested by Santam). This landmark judgement now places the South African hospitality and tourism industry in a position to survive the pandemic, and rise up again, by holding their insurers to their obligations to pay out for claims of this nature.

“The Sanlam judgment is of enormous importance not just to our clients but to the entire hospitality industry which was put on hold as a result of COVID-19. Many more businesses in this sector might now have a real chance at survival.” - Anel Bestbier, Thomson Wilks


All Rights Reserved
©Thomson • Wilks 2024

View on desktop for an
optimal experience


Privacy policyterms & conditionspractice areasour teamacts & legislationnews & mediamake a payment

make a payment

Pay with

(coming soon)


We are proudly helping to build