Santam Limited v Ma-Afrika Hotels (Pty) Ltd and Another

Santam Limited issued business interruption insurance policies to Ma-Afrika Hotels (Pty) Ltd and The Stellenbosch Kitchen (Pty) Ltd, which included cover for losses arising from the occurrence of a notifiable infectious disease within a 40 km radius of the insured premises. Following the outbreak of Covid-19 in March 2020 and the subsequent national lockdown, the respondents suffered loss of revenue and claimed indemnification under the policies. Santam disputed liability for most claims and, where liability was conceded, contended that any indemnity period was limited to three months, arguing that infectious disease cover was an ‘extension’ subject to a three-month limit. The respondents sought declaratory relief in the Western Cape High Court, which held that Santam was liable and that the applicable indemnity period was 18 months. Santam appealed to the Supreme Court of Appeal, confining the appeal to the question of the indemnity period.

The appeal was dismissed with costs, including the costs of three counsel. The declaration that the applicable indemnity period was 18 months remained in force.

The case is significant in South African insurance law for confirming that infectious disease business interruption cover arising from Covid-19 was not subject to an implied three-month indemnity limit where the policy Schedule expressly provided for an 18-month period. It reinforces principles of insurance contract interpretation, particularly the restrictive interpretation of limitation clauses and the application of the contra proferentem rule against insurers. The judgment forms part of the leading SCA jurisprudence on Covid-19 related business interruption claims.