AIG South Africa Limited v 43 Air School Holdings (Pty) Ltd and Others

AIG insured 43 Air School and related entities under a policy providing business interruption cover for losses caused by, inter alia, an outbreak of a notifiable disease within 25 km of the insured’s premises. Following the COVID-19 pandemic and national lockdown, 43 Air School submitted two claims for business interruption losses allegedly triggered by a COVID-19 outbreak within 25 km of its Port Alfred premises. It later sought to advance a third claim based on outbreaks near other group entities’ premises. PTC Aviation and Jet Orientation Centre also sought indemnification for losses allegedly suffered due to outbreaks near their Gqeberha premises. AIG repudiated liability, disputing causation, compliance with reporting clauses, whether certain claimants were insured, and whether the policy was joint or composite. The High Court upheld all claims; AIG appealed to the Supreme Court of Appeal.

The appeal succeeded in respect of the third claim of 43 Air School and the claims of PTC Aviation and Jet Orientation Centre, which were dismissed. The appeal was dismissed in respect of the first and second claims of 43 Air School. The High Court order was amended accordingly, and the parties were ordered to bear their own costs.

The case provides authoritative guidance on the distinction between joint and composite insurance policies in South African law, particularly in the context of business interruption claims arising from COVID-19. It confirms that group relationships, shared premiums, or aggregate limits do not render a policy joint where insureds have separate interests, and it reinforces the importance of compliance with policy reporting requirements.