Pub and hotel bring business interruption insurance cases

Two more cases have been brought before the Commercial Court over a refusal by an insurance company to provide an indemnity for business interruption insurance due to the pandemic.

Charlie's Bar, Loughrea, Co Galway, operated by Charwin Ltd, and the Old Imperial Hotel in Youghal,Co Cork, operated by Coachhouse Catering Ltd, have brought separate claims against Slovenia-based Zavarovalnica Sava insurance company. The Old Imperial's company is also suing its Irish broker, Frost Insurance , trading as Frost Underwriting UQuote.

On Monday, Mr Justice David Barniville adjourned both cases to June for a hearing on an arbitration clause in the policies which the insurance company has invoked.

Charwin claims it is entitled to an indemnity under the policy for interruption/losses after March 15th last year when the first lockdown was announced. It also seeks a declaration the closure order from that date constituted a loss and/or destruction and/damage to the property it uses for business.

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Charwin director Brian Winters said in an affidavit that Charlie's employs 17, three full-time and 14 part-time staff in what had been a traditional "wet pub" (does not serve food).

In an effort to mitigate losses, Mr Winters said they carried out significant work on the premises to provide substantial meals.

On August 21st, it was able to reopen as a “dry pub”, remained open until the October 21st lockdown and reopened on December 4th. It closed when the last lockdown was announced on December 24th and has not traded since.

The closures had resulted in losses of around €9,000 – €10,000 per week, he said.

In the Old Imperial Hotel action, it claims it is entitled to be indemnified under its contract of insurance which ran from February 2020 to February of this year. It also seeks damages for alleged breach of contract, including aggravated and/or exemplary damages.

Dan Leahy, a director and manager of Coachhouse Catering, said in an affidavit the defendants appeared, in declining the indemnity, to be making the case the cover was for interruption to business as a result of damage to the insured premises.

His advice is that the meaning of “damage” in the policy is not clearly defined and Covid-19 has not been excluded from the policy. This ambiguity, he was advised, should be interpreted in favour of the insured, he said.