The High Court ruling in favour of four publicans was a highly anticipated judgement on this pandemic insurance case. The publicans took a test case against FBD when the insurance company refused compensation for Covid pandemic closures. In this blog, Orpen Franks looks at how the judgement might impact other businesses affected by Covid closures.
Immediate Impact of Pandemic Insurance Case
The pandemic insurance win for the four Leinster-based publicans has significance beyond those who took the case. It will immediately impact over 1,000 other Irish pubs and restaurants who have made similar claims against FBD.
The case against FBD centred on the correct interpretation of a particular clause. In this clause, the insurer stated it would compensate business owners for imposed closures as a result of an order by a “local or government authority following outbreaks of contagious or infectious diseases on the premises or within 25 miles.”
FBD argued that the Covid-19 pub closures did not qualify under this clause. They claimed they weren’t prompted by the outbreak of disease on the insured premises or within 25 miles of them.
FBD also contended that the clause could not be interpreted as including events associated with the pandemic. They argued that this was because the general insurance market in Ireland does not provide cover for such events.
The Pandemic Insurance Judgement
Mr. Justice Denis McDonald’s judgment, however, dismissed these arguments and held against FBD. He ruled that businesses were covered once there was an outbreak within a 25-mile radius of an insured premises. His ruling said that the outbreak was one of the causes of the closure.
His judgment follows a unanimous UK Supreme Court decision in January, upholding similar claims against insurers in the United Kingdom.
Following the judgment, the Central Bank of Ireland issued a statement welcoming the High Court ruling. The Central Bank indicated that it would continue engaging with insurers on this issue.
FBD Response to Pandemic Insurance Ruling
FBD say they will not be appealing the judgment. They said they would begin to engage with affected businesses immediately. It remains to be seen how FBD and other insurance companies will deal with each claim. However, it’s likely that insured parties will still be required to prove the level of their loss.
Short and Long-Term Impact of the Ruling
The judgment should provide a welcome boost to insured pubs and restaurants with business interruption insurance. However, it is likely that such businesses may incur higher insurance premiums in future as a result of these pandemic-related pay outs.
If you require advice relating to a claim against your insurer, please contact Daragh O’Donovan in our dispute resolution team. You can call them on 00353 1 637 6200.