Irish Pubs Win Test Case Over Lockdown Insurance Claims

By Padraic Halpin | February 5, 2021

DUBLIN — Ireland’s High Court ruled on Friday that four pubs insured by FBD were entitled to be indemnified for losses under lockdown-linked claims, in a test case that could have implications for over 1,000 similar contracts.

Irish pubs have been shut for large parts of the last 10-1/2 months due to COVID-19 restrictions that were toughest on bars that do not serve food. They were only allowed trade for a total of two weeks and not permitted to open at all in Dublin.

The court heard in October that FBD had sold the policy in question to around 1,300 pubs throughout Ireland, ranging from small rural pubs to larger urban bars. FBD estimated in July that the claims would cost 30 million euros ($36 million).

“It should never have come to this,” Noel Anderson, managing director of Dublin’s Lemon & Duke, one of the four pub managers who took the case, said in a statement.

“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.”

FBD said it was committed to paying all valid claims and would arrange interim payments while awaiting clarity on the final quantum. It said it expected the cost to be “well within the range of considered financial outcomes.”

Ireland’s latest lockdown shut briefly reopened bars down again on Dec. 24 and is unlikely to be lifted until April at the earliest.

In each of the four cases, FBD declined cover on the grounds that the imposed closure did not arise in consequence of an outbreak of COVID-19 on any of the plaintiffs’ premises or within a 25-mile radius of the premises.

Judge Denis McDonald rejected that argument in a more than 200-page written judgment. He said the pubs may be indemnified for losses beyond the period of imposed closure until those losses cease or the indemnity period comes to an end.

The issue of quantifying the losses will be dealt with at a later date and the sides will agree on the next steps in court on Feb. 17, the judge said.

Shares in Ireland’s only domestically listed insurer were 1.4% lower at 6.98 euros at 1255 GMT.

The ruling follows similar decisions by Britain’s highest court last month and a French court last year.

Irish Deputy Prime Minister Leo Varadkar, who as business minister has introduced a number of state supports to keep shuttered firms afloat, said the judgment was welcome news for small businesses across Ireland.

Ireland’s central bank also welcomed the ruling and said it would closely examine the impact for customers of insurance firms. The regulator has estimated there are about 90,000 business interruption policies in Ireland, some of which provide pandemic cover.

Representative groups for pubs called on insurers to quickly review their policies and promptly pay all valid claims.

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