Pubs challenge FBD Insurance over Covid cover

The High Court heard that 1100 Irish pubs and bars are affected by the insurance dispute
Pubs challenge FBD Insurance over Covid cover

FBD claims the policy only covers closure orders made following localised events, and that an event such as the pandemic is not covered.

Insurers FBD's reasoning for not paying out business interruption claims caused by the Covid-19 pandemic to publicans are "plainly wrong" and "make no sense", the Commercial Court has heard.

In what are seen as important test cases, lawyers representing four publicans have brought cases challenging FBD Insurance Plc's refusal to indemnify them, and the insurer’s stance that its policies of insurance do not cover the disruption caused to businesses by Covid-19.

Opening the action Michael Cush SC, who is representing three Dublin-based pubs, said FBD’s refusal to indemnify his clients for losses incurred due to the pandemic, was on grounds that the policies do not cover national or widespread outbreaks of a disease that result in the closure of a business.

FBD claims the policy only covers closure orders made following localised events, and that an event such as the pandemic is not covered. That interpretation, counsel said, was “clearly wrong”.

What FBD seemed to be saying is that “the more widespread the peril” then the higher the likelihood that cover does not have to be provided. That position, counsel submitted, “makes no sense.” 

Counsel told Mr Justice Denis McDonald that 1100 Irish pubs and bars are affected by the dispute which arose after the insurer refused to provide them with cover since the pandemic resulted in the temporary closure of businesses in mid-March.

Counsel added the outcome of the case is also relevant to many other businesses and insurers and not just publicans.

The claims of the publicans

The focus of the cases before the court was the interpretation of the insurance policy and not the impact on the publican’s business or on the insurer’s business, he said.

The actions before the court have been taken by Dublin bars Aberken, trading as Sinnotts Bar; Hyper Trust Ltd, trading as ‘The Leopardstown Inn’ and ‘Inn on Hibernian Way’ Ltd trading as Lemon & Duke, represented by Michael Cush SC.

The fourth action is by Leinster Overview Concepts Ltd, which trades as Sean's Bar, in Athlone, Co Westmeath, which is represented by Eoin McCullough SC.

They claim that under their policies of insurance taken out with FBD they are entitled to have their consequential losses covered by what they claim is an insurable risk.

They also claim that the insurer is in breach of contract.

The publicans claim the insurance policies taken out with FBD have a clause that states the pub owners will be indemnified if their premises are 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's interpretation

That interpretation of the clause is disputed by FBD, who in April informed the pub owners that a pandemic does not fall within the scope of the clause.

FBD, represented by Declan McGrath SC, says the closures did not occur as a result of an outbreak of disease at the premises or areas where the pubs are located.

The closures occurred as a result of measures taken at a national level that involved a nationwide closure of business.

The core issue of the publicans' case

Mr Cush said the core issues in the cases include whether any cover has been triggered by the pandemic, and if so what is the ambit of cover provided by the policies.

Counsel said that FBD’s position on such issues is “plainly wrong”.

Counsel said the insurer’s arguments to the court against the claims were not supported by the contents of documents FBD gave to its customers in summarising what events are covered by the insurance policies and what are not.

Counsel added that his clients were relying on the English High Court’s decision in a case where that court was asked to determine if the pandemic should trigger pay-outs to holders of business interruption insurance policies.

That court ruled in favour of the UK’s Financial Conduct Authority (FCA), which brought the case on behalf of the policyholders, on the majority of the key issues, counsel said.

In particular, the UK court ruled that pay-outs were triggered under certain “non-damage” clauses that covered disease and denial of access to business premises.

That decision is under appeal to the UK's Supreme Court, counsel said.

In the Irish pub owner's actions they seek various orders and declarations including orders directing FBD Insurance Public Limited Company to indemnify the pubs in respect of the losses they suffered due to their closure following the outbreak.

They also seek declarations including that they are entitled to an indemnity from FBD under the provisions of their policy of insurance in respect of claims they have made to the insurer.

The hearing continues, and is expected to last several weeks.

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