By Lucia Osborne-Crowley

Law360, London (June 18, 2021, 3:40 PM BST ) Insurance giant Aviva has hit back at a law firm's claim for losses connected to the COVID-19 pandemic, saying the lockdowns did not force lawyers out of offices and claiming that any payout should be capped at £50,000 ($69,000).

Aviva PLC told the High Court in a June 11 defense, which has now been made public, that it should not have to pay law firm Everatt's LLP the losses it is claiming as a result of the 2020 COVID-19 lockdowns, which it said forced its lawyers to stay away from its offices in Harrow, northwest London.

The law firm, which has been acquired by Axiom Stone Solicitors, asked in its lawsuit for a payout to cover a loss of income up to £478,000 and a range of increased office expenses totaling approximately £150,000.

But Aviva told the court in its defense that the business interruption policy Everatt's took out does not cover the lockdown losses because the majority of those claimed were "attributable only to the wider effects of the COVID-19 pandemic and not to the hindrance or prevention of access to or use of the premises."

The insurer said it is only liable to cover losses directly connected to lost income resulting from lawyers inability to attend the office between March and September 2020. These losses are capped at £50,000 under the policy, Aviva said.

It added that the law firm failed to submit information to its loss adjusters that was intended to figure out the exact loss attributable to the office closures, saying the firm went straight to the courts instead.

"The claimant nonetheless failed to provide the loss adjuster with sufficient information to review the claim and then precipitately issued proceedings before the defendant had received the loss adjuster's report," the defense argues.

Everatt's says its claim against Aviva was assigned to chartered loss adjusters Sedgwick International UK in January, but since then there has been no proposals or interim payouts.

Insurers lost a court battle with regulators over whether insurers should pay out on business interruption policies because of the pandemic lockdowns. The U.K. Supreme Court ruled in January in favor of many policyholders after the Financial Conduct Authority, the City watchdog, brought a test case on their behalf.

The regulator had sued eight insurers with 21 policy wordings as it sought to reach an "authoritative declaratory judgment" that would have wide application.

The test case shone a light on so-called non-damage extensions to business interruption insurance. Policies for interrupted business often offer cover only if a company is forced to close as a result of physical damage to a property. Many insurers refused to pay out on claims after the country was first locked down in March and the coronavirus outbreak took hold. Such policies were not intended to cover global pandemics, they argued.

Aviva did not immediately respond to Law360's request for comment on Friday.

A spokesperson for Everatt's said the firm had started proceedings after Aviva did not acknowledge its letter of claim.

"We were disappointed with Aviva's failure to promptly deal with our claim for loss arising under our business interruption policy, leading to a letter of claim being sent to Aviva on April 22, 2021, which they did not even acknowledge," the spokesperson said.

"Even more disappointingly, Aviva has now filed a defense, which on the one hand denies liability and on the other hand admits our right to an indemnity, without any interim payments being offered or settlement terms proposed," they added.

Everatt's is represented by Axiom Stone Solicitors.

Aviva is represented by Holman Fenwick Willan LLP. Full counsel information was not immediately available.

The case is Everatt's LLP v. Aviva Insurance Ltd., case number CL-2021-000275 in the Commercial Court, High Court of Justice of England and Wales.

--Additional reporting by Joanne Faulkner. Editing by Joe Millis.

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