Insurance policy ‘riddled with confusion’ should cover Covid disruption, court hears

Youghal hotel opens business interruption case against Slovenia-based insurer and a broker

The case is being heard, both as a physical and remote hearing, through the TrialView system. Photograph: iStock

The case is being heard, both as a physical and remote hearing, through the TrialView system. Photograph: iStock


A business interruption insurance policy is “riddled with obfuscation and confusion” and should be interpreted as providing cover for Covid-19 disruption, the Commercial Court has been told.

Richard Kean SC made that argument on Tuesday when opening a case by a hotel against a Slovenia-based insurer and a broker. The case has implications for several similar businesses which were closed by the pandemic, counsel said.

Coachhouse Catering Ltd, which runs the Old Imperial Hotel in Youghal, Co Cork, has brought the action over what it says is the refusal of the Zavarovalnica Sava insurance company to provide an indemnity for losses suffered under a business interruption insurance policy provided by the firm.

The plaintiff is also suing the Irish broker Frost Insurance, trading as Frost Underwriting UQuote.

‘Almost lost their minds’

Coachhouse 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 claims the closure order from that date constituted a loss and/or destruction and/damage to the property it uses for business.

It is claiming damages for alleged breach of contract, including aggravated and/or exemplary damages.

The defendants deny the claims.

Opening the case, Mr Kean said Zavarovalnica Sava is an insurer and re-insurer which made a €47.6 million net profit last year. The firm promises on its website to “never leave you alone” and that it is caring and professional, he said,

“It also says it gives you peace of mind but the plaintiffs have not been given peace of mind; they have almost lost their minds”, counsel said.

The core of Coachhouse’s case is that the closure of the hotel caused loss and that the insurance policy was “riddled with ambiguity”, he said.

The defendants themselves did not know what the policy was about, he said. As a policy which is “riddled with obfuscation and confusion”, it should be interpreted in favour of his client, counsel said.

Peter Mills, an insurance expert called on behalf of Coachhouse, said the general exclusions section of the policy did not specifically exclude pandemic risk. Such a specific exclusion “would have made this litigation moot”, he said.

Under cross-examination, Alan Grace, a retired insurance expert on behalf of the defendants, said, before Covid, pandemics like Sars and swine flu were “on the horizon” and some insurers chose to include them while others sought to reduce cover for them. Generally however, they did not put pandemic exclusions in the policy, he said.

Asked by Mr Kean where was Covid specifically excluded in the Coachhouse policy, Mr Grace said it was not in the policy. He said the policy was not very well constructed and drafted.

The case continues before Mr Justice Denis McDonald. It is being heard, both as a physical and remote hearing, through the TrialView system.