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Insurance companies must pay closed businesses for loss

Landmark High Court case confirms insurance cover for Covid -19 closed business

Following the landmark ruling in a number of cases on Friday by the High Court of Ireland insurance companies can now be pursued for business loss as result of the closure of businesses due to Covid-19 in Ireland

The premise of the four individual cases taken by Aberken Ltd., Hyper Trust Limited and others was that the closure of business was covered by their business insurance in each case under the heading of business interruption cover and consequential loss. The Insurance company in this case FBD, had sought to deny the cover on their narrow interpretation of the relevant definition in their insurance policy and normal industry practices. The insurance company argued that “business interruption” had to be caused by a specific event that happened within 25 kilometres of the business. A nationwide outbreak of Covid-19 did not qualify as coming with the clause.

Other arguments put forward by the insurance company included, notwithstanding the terms of the policy, that they did not cover pandemics and this was a different specialist form of insurance not included in these policies. The pub owners argued however that the clause in question 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.”

The High Court disagreed with the insurance company’s interpretation and concluded in its judgment that the nationwide outbreak was irrelevant so long as in this case there was any outbreak within 25 kilometres of the business in question. This bought the claim within the remit of the condition in question.

An important development prior to the outcome of the case was a similar ruling in the UK High Court prior to the delivery of judgement in this case. The judgement in Ireland was postponed allowing both sides consider the impact of the ruling in the UK court. Under Irish law the Court in Ireland routinely consider similar cases in the UK going so far sometimes to say such cases can have a “persuasive effect” on decision in this jurisdiction.

The Vintners Federation of Ireland issued its statement welcoming the decision. It had earlier heavily criticised the insurance companies for refusing cover for closures. In the statement Mr. Paddy Cribben, VFI Chief executive states “This High Court decision is the first good news the 1,100 publicans who are FBD customers have received since the crisis began last March. Publicans took out business interruption cover with FBD in good faith and the decision by the insurance company to challenge that cover caused huge distress for our members at a time when they were at their most vulnerable.”

The Insurance company is now considering its position and reviewing the judgment in detail.

At the Abacus Legal Network we are connected to Ireland’s leading litigation solicitors and insurance specialists. The owners of any closed business experiencing difficulty in claims on their insurance can seek the best advice on the policy conditions and the extent of a claim for insurance for business interruption linked to Covid-19 in Ireland. Connect with us below and we will take it from there.

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