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Following the landmark judgment in the UK test case on business interruption insurance, test cases have begun here in Ireland, with four publicans challenging FBD Insurance Plc’s refusal to indemnity them as well as the insurer’s interpretation of their policies in relation to Covid-19. An overview of the case so far is set out below.
The Action
Four Irish pubs have taken action against FBD Insurance Plc.
The dispute centres on whether or not the pubs’ FBD insurance policies cover them against the impact Covid-19 has had on their businesses. The test case commenced in the Commercial Court on the 06 October 2020 and is set to run for a number of weeks. With up to potentially 1100 pubs affected by the outcome there are a lot of eyes on this test case, eagerly awaiting the outcome.
The Dispute
In short, FBD Insurance Plc claim their policies of insurance do not cover the disruption caused to businesses by Covid-19.
This position is strongly contested by the publicans, with their Senior Counsel Michael Cush stating that FBD’s interpretation was “clearly wrong”.
The main focus of this case will be the interpretation of insurance policies, similar to the UK class action taken by the UK Financial Conduct Authority (FCA) (read our analysis of the judgement in this case here), with Counsel for the publicans stating they will be relying on the UK FCA test case_._
The publicans argue that their policies with FBD include a clause that suggests pub owners are indemnified if they are forced to close by order of the local authority or Government due to “outbreaks of contagious or infectious diseases on the premises or within 25 miles of same”. FBD argue that as the closures did not occur as the result of an outbreak of disease on the premises or areas where the pubs are located, that the pub closures don’t fall within the scope of their policy cover.
Recoverable Losses
One thing both sides have agreed on is the recoverable losses. They concur that the losses (if any) attributed to the closure are stripped out, not the overall losses as a result of the pandemic, meaning the recoverable losses would be the difference between being open and operating during the pandemic and the losses incurred as a result of having to close the premises by Government order.
The hearing has concluded and Judgment will be delivered in January 2021.
About the author: Cìaran Leavy, Partner and Head of litigation