Coronavirus (COVID-19)—Ireland business interruption test case

Coronavirus (COVID-19)—Ireland business interruption test case

The cases are: Hyper Trust Ltd t/a The Leopardstown Inn v FBD Insurances Plc, Case No 2020/3656 P; Leinster Overview Concepts Ltd t/a Sean’s Bar v FBD Insurance Plc, Case No 2020/3453 P; and Inn on Hibernian Way Ltd t/a Lemon & Duke v FBD Insurance Plc, Case No 2020/3402 P, all in the High Court of Ireland.

Four pub owners have already sued FBD over its policies in the Commercial Court. The insurer plans to use those claims, which will be heard together on 6 October 2020, as a test case for its obligations under business interruption policies in the latest dispute between businesses and insurers across Europe as they cope with coronavirus shutdowns.

FBD said the judgment will determine liability for its other clients with business interruption insurance, who will not have to pursue their cases through the courts. FBD said it is ‘strongly of the view’ that its policies do not offer protection from losses linked to the pandemic.

FBD is one of Ireland’s biggest domestic insurers, providing farm insurance as well as business cover to more than 1,300 small pubs. Ireland’s pubs suffered from lost business as a result of the lockdown, which started on 12 March 2020, five days before St Patrick’s Day celebrations got under way, and has only just started to ease.

‘FBD is confident in our interpretation of policy coverage and are of the view that this approach will provide clarity in an expedient manner to the customers concerned,’ FBD said in a statement.

The company did not respond immediately to a request for comment over its legal representation.

The policyholders are the operators of three Dublin pubs, the Leopardstown Inn, Sinnotts Bar and the Lemon & Duke, and Sean’s Bar in Athlone, central Ireland.

Business interruption policies typically offer protection only when there is property damage, for instance, from a fire, forcing the company’s premises to temporarily cease trading.

Some policy extensions offer protection if a public authority orders the premises to be shut after the outbreak of an infectious disease. Claimants say those extensions provide them with cover in the case of a pandemic, but insurers say the policies were intended to cover limited outbreaks of viruses on site.

Litigation is on the rise in Europe and the UK in response to insurers refusing to pay out on claims under business interruption policies.

In a separate move on 26 May 2020, AXA’s chief executive told a French broadcaster that the company will pay most business interruption claims to restaurant owner customers who had similar policy wordings, after it lost a court battle in Paris last week. A spokesperson for the company did not respond to a request for comment.

In the UK, the Financial Conduct Authority is pursuing a test case over the policy wording of several insurers, with the results becoming legally binding on those insurers. Alongside that, hundreds of small businesses have launched group litigation against insurers including Hiscox, RSA, Aviva and QBE over refusal to pay coronavirus business interruption claims.

Full counsel details were not immediately available, but all claimants with the exception of Sean’s Bar are represented by barrister Michael Cush, SC.

This content is based on an article first published by Law360, a LexisNexis® company, on 26 May 2020 and is published with permission.

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