The High Court has rules that pub owners are entitled to compensation from FBD Insurance for the disruption their businesses suffered as a result of the COVID 19 lockdowns.
The landmark decision affects thousands of pubs and restaurants around the country.
Four test actions were taken on behalf of around 1,000 businesses by Aberken Ltd, trading as Sinnotts Bar; Hyper Trust Ltd, trading as The Leopardstown Inn; Inn on Hibernian Way Ltd trading as Lemon & Duke; and Leinster Overview Concepts Ltd trading as Sean’s Bar.
Noel Anderson, Managing Director of Lemon & Duke, said: “It should never have come to this. I specifically had taken out a business interruption policy to protect us against Covid-19 and its potential impact on our business. As the court heard during the trial, this was acknowledged in writing by FBD.
“Yet in order to have our claim settled we were forced to go through 10 months of deep financial uncertainty, significant additional risk in taking this action as well as extensive stress and strain to arrive at an outcome which should have been clear from the outset.”
The publicans challenged FBD’s refusal to indemnify them, as well as the insurer’s claim that its policies did not cover the disruption caused by the lockdowns. The claimants argued that FBD was in breach of contract as a result.
The policies taken out with FBD included a clause that states the pubs would be indemnified if the businesses 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 disputed this, and claimed that the closures did not occur as a result of an outbreak of disease in the premises directly or in an area where the pub is located. FBD further claimed that the insurance market in Ireland does not insure against events like pandemics.
Final judgement was initially set for January however was delayed to allow the parties to make submissions to the court based off a similar UK Supreme Court case.
Mr Justice Denis McDonald ruled that the policy sold by FBD covered losses sustained by having to close due to a global health emergency, something the insurer had contested. In a lengthy judgement, he said cover is not lost if the closure is forced by a nationwide outbreak of a disease.
The issue arose in March 2020 when hospitality businesses first closed due to the pandemic, and the insurer refused to provide policyholders with coverage. FBD is the largest insurance company in the hospitality space and in many cases is the ony option for business owners.
Donall O’Keeffe, Chief Executive of the Licensed Vintners Association, said: “These publicans deserve enormous credit as their action will prove critical to pubs with similar policies right around Ireland. It was grossly unfair that these family businesses had to go to the High Court against the might of a publicly quoted insurer to have their claims validated.”
“We are now calling on insurers to quickly review their business interruption policies in light of today’s decision and to promptly pay all valid claims.
“Given the disastrous impact of the pandemic on the pub trade, today’s judgement will provide hope to many publicans all across the country.”
Noel Anderson continued: “We would encourage FBD and other insurance providers to reflect on the outcome of this case and where valid business interruption policies exist we hope they will be forthcoming in making payments to the relevant pubs and other businesses impacted as they fight for their survival.”
Padraig Cribben, Chief Executive of the Vintners Federation of Ireland (VFI), said: “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.
“While the full detail of the court’s 214-page decision is still being analysed, we know that publicans with these policies will now be compensated for the losses incurred by the pandemic.”
The issue of quantifying the losses will now be dealth with at a later date.