In a landmark decision, the outcome of which affects claims made by more than 1,000 Irish pubs and restaurants, the judge found that a policy sold by FBD covered losses the pubs sustained by having to close due to the global health emergency.

The actions were taken by three Dublin bars – Sinnotts, The Leopardstown Inn and Lemon and Duke – as well as Sean’s Bar in Athlone.

Their lawyers claimed that under their insurance policies they were entitled to have their losses caused by the pandemic covered.

However, FBD argued that the closures were not due to an outbreak of disease at the premises or within 25 miles of them. FBD said the closures happened because of a national situation which was not covered.

The High Court disagreed with this interpretation.

Mr Justice Denis McDonald said cover was not lost where the closure was caused by nationwide outbreaks of disease, provided there was an outbreak within the 25 mile radius and that that outbreak was one of the causes of the closure.

Such outbreaks were a cause of the closure of the pubs announced by the Government on 15 March last year he said.

The fact that closures outside the 25 mile radius were also causes of the decision did not alter that conclusion.

More than 1,000 firms have similar policies with FBD and the result will also be of interest to those taking claims against other insurers.  FBD set aside €30 million to cover any costs arising from the outcome of the case.

The judge ruled the issue of quantifying the losses suffered by the publicans will be dealt with at a later date.

The case will be back before the court on 17 February.

Noel Anderson, the Managing Director of Lemon & Duke, said today’s High Court decision represents vindication for the pub and the other businesses dependent on the outcome of this action.

“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,” Mr Anderson said.

“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,” he added.

“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,” he concluded.

The Central Bank also said it welcomed the judgment of the High Court in respect of the test case on Business Interruption Insurance.

“We will be closely examining the potential impact of this judgment for customers in the context of our sustained and ongoing engagement with relevant firms,” the bank said in a statement.

Alliance for Insurance Reform calls on insurers to settle all valid business interruption claims

The Alliance for Insurance Reform has welcomed the decision of the Commercial Court in four test cases brought by pub owners over FBD’s refusal to pay out on business disruption over the Covid-19 pandemic.

Peter Boland, Director of the Alliance, said he was calling on the Central Bank to demonstrate that safeguarding consumers is a priority by publishing an update on the work they have carried out under their Covid-19 and Business Interruption Insurance Supervisory Framework.

“Keeping that work under wraps merely facilitates insurers determined to minimise their exposure to valid Covid19-related business interruption claims,” Mr Boland added.

Vintners welcome ruling as ‘excellent news’

The Vintners Federation of Ireland has welcomed the ruling as “excellent news” and called on FBD and other insurers to “recognise the situation” and start to settle the claims made for business interruption due to the closures during the pandemic.

Speaking on RTÉ’s Today with Claire Byrne VFI, chief executive Padraig Cribben said between 1,100 and 1,600 policyholders will be impacted by the ruling.

He said said that the decision means survival for a lot of businesses and that it is “unfortunate” the insurers took the legal route and delayed paying the claims as this has caused a lot of anguish.

Mr Cribben said that there are 7,100 licensed premises in the country but many insurance policies do not cover business interruption, while some “clearly do”.

He said in some policies where the guidelines are unclear the Central Bank says that insurance companies should interpret it in the favour of the policy holder.

The Licensed Vintners Association has also welcomed the decision in favour of three of its members (Noel Anderson, Chris Kelly Group, Loyola Group) and Sean’s Bar, Athlone in their case against FDB for Covid-19 business interruption cover.

Donall O’Keeffe, chief executive of the LVA, said the 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,” Mr O’Keeffe said.

The LVA called 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,” he concluded.