The ruling could impact claims made by around 1,000 Irish pubs and restaurants
The High Court in Ireland ruled on Friday that insurer FBD will have to pay out on business interruption (BI) claims for four pub owners whose businesses have been disrupted by the Covid-19 pandemic, reported The Journal.ie.
The judgment, which is precited to impact claims from around 1,000 Irish pubs and restaurants, agreed with the publican policyholders - Mr Justice Denis McDonald found that the policy in question sold by FBD covered the pubs’ losses caused from having to close due to the global health emergency.
Judge McDonald said cover is not lost if the closure is prompted by nationwide outbreaks of a disease, provided that there is an outbreak within a 25-mile radius of the premises and that the outbreak is one of the causes of the closure, reported The Journal.ie.
Calculating the quantum of the losses will be decided at a later date, continued the judge.
The case was brought by Aberken, trading as Sinnotts Bar; Hyper Trust, trading as The Leopardstown Inn; Inn on Hibernian Way, trading as Lemon and Duke; and Leinster Overview Concepts, the owner of Sean’s Bar, which is based in Athlone, Co Westmeath.
The publicans took action after FBD refused to pay out after the first lockdown in March 2020.
The judgment was initially due to be delivered in January, however this was deferred to allow the participating parties to make submissions based on the UK’s Supreme Court appeals ruling, which also dealt with unpaid Covid-related BI claims. This was published on 15 January.
‘It should never have come to this’
In the case, the pub owners claimed that their FBD policies contain a clause that states the pubs will be indemnified if their premises were closed by order of the local or government authority if there are “outbreaks of contagious or infectious diseases on the premises or within 25 miles of same”.
FBD disputed this, arguing that the closures did not occur as a result of an outbreak of disease at the premises or areas where the pubs are located.
It said it has never provided cover for pandemics and no-one in Ireland has ever asked for it.
Speaking on the result, Noel Anderson, managing director of Lemon and Duke, told The Journal.ie: “It should never have come to this. I specifically had taken out a business interruption policy to protect us against Covid-19 and its potential impact on our business. As the court heard during the trial, this was acknowledged in writing by FBD.”
Furthermore, the decision has been “warmly welcomed” by the Vintners Federation of Ireland (VFI), the 1,100 publicans who are FBD customers and the wider pub sector, added the online newspaper.
Labour’s finance spokesperson Ged Nash described the ruling as a “watershed moment” and “a shot in the arm for beleaguered main street businesses across the country”.
“These pub businesses should never been placed in this position, having to seek redress in the courts to obtain compensation on a valid claim for Covid-19-related disruption to their businesses,” he said.
“It is nothing short of insulting after years of sky high, perpetually escalating high premiums and suspect practices from the insurance sector. The details of this David v Goliath case shows yet again the contempt with which some in the industry hold their loyal, bob creating customers.
“The gloves must be taken off and all options, including a levy on insurance profits must now be considered to bring an out-of-control sector to heel.”
Donall O’Keeffe, chief executive of the Licensed Vintners Association, added: “These publicans deserve enormous credit as their action will prove critical to pubs with similar policies right around Ireland.
“It was grossly unfair that these family businesses had to go to the High Court against the might of a publicly quoted insurer to have their claims validated.
“Given the disastrous impact of the pandemic on the pub trade, [the] judgment will provide hope to many publicans all across the country.”