Pandemic Insurance – Will it pay out
Many eyebrows were raised last year when FBD Insurance refused to pay out in relation to business interruption losses on the basis that they argued that the cover provided by their insurance policy did not extend to losses which had been incurred by the policy holders due to a pandemic such as Covd 19. In October of last year Mr. Justice McDonald heard claims brought by the owners of four licenced premises that the refusal by FBD was the breach of their insurance contract. A decision has not yet been released by the Court but a similar case came before the English High Court in Financial Conduct Authority -v- Arch Insurance. This case was relied upon by the parties in the FBD hearing.
In the Arch case the Court stated that it had to “ascertain what a reasonable person i.e. a person who has all the background knowledge which would reasonably been available to parties in the situation in which they were at the time of the Contract, would have understood the contracting parties to have made by the language used”. In the particular case and based on the particular facts the High Court found that each policy had to be strictly construed according to the wording of the policy. It found that while most of the policies did provide some form of cover, the cover did necessarily extend to the entire period affecting trade nor for all of the losses which arose as a result of Covd 19.
There was a further case of TKC London Limited -v- Allianz PLC in which the English High Court ruled in favour of the insurance company even though that the policy was held out as covering “all risks”.
It will be very interesting to see what the outcome of the High Court case is but it is certainly important for owners of businesses who take out business interruption cover that they should not assume that the policy will pay out.
For any advice in relation to any Company Law matter please don’t hesitate to contact Brendan Dillon or Conor White on 01-2960666
