No cover for Covid shutdown because disease not manifest ‘at’ Ranelagh hotel

The High Court has found a business interruption insurance policy held by the Devlin Hotel in Ranelagh, Dublin, did not cover Covid-19 pandemic closure because the disease did not manifest itself “at” the premises.

The Devlin is owned by Premier Dale Ltd, which is part of the Press Up Entertainment Group.

The case concerned an insurance policy provided by RSA Insurance Ireland DAC. Proceedings against the broker Arachas were struck out earlier this year.

Another Dublin hotel, the Clarence, also part of Press Up, last year lost a challenge over a refusal by AXA to provide indemnity due to pandemic closures.

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On Wednesday, Mr Justice Denis McDonald said his findings in what was the main issue in a test case brought by the Devlin will have implications for other RSA policyholders.

The Devlin argued it was entitled to be indemnified as a result of all losses arising as a result of closure in March 2020.

RSA denied the claim and said none of the policy clauses claimed by the Devlin entitled it to an indemnity.

In particular, RSA said the Devlin had agreed there was no diagnosed, confirmed or identified case of Covid-19 on or at the hotel prior to its closure on March 16th, 2020.

In rejecting the Devlin’s case, Mr Justice McDonald said the central issue for determination by the court related to the “closure/disease” clause in the policy, taken out by the hotel in October 2019.

This clause covered loss as a consequence of “closure or restrictions placed on the premises on the advice or with the approval of the Medical Officer of Health of the Public Authority and as a result of a notifiable human disease manifesting itself at the premises’”.

The judge found there was no significant controversy between the parties in relation to what closure or restriction meant and there was, therefore, no need for him to consider this.

With regard to what was meant by a notifiable disease “manifesting itself at the premises”, the judge concluded this required at least one of the following: a symptomatic case of a notifiable disease at the hotel; a diagnosed case of a notifiable disease at the premises; or the detection of the causative pathogen.

Not proven

The Devlin had not proved these elements as having been manifested “at” the premises in accordance with the policy, he found.

In the light of this finding, where it has been found the insured peril has not been proven to have occurred, the question of whether loss is covered by the manifestation of a notifiable disease “beyond the premises” did not arise, he said.

The judge also said that, had something broader been intended in the policy, one would expect to see different language used such as “in the vicinity of” the premises or a reference to a radial distance around it.

He said the use of a very simple and straightforward combination of words “manifesting itself at the premises” plainly suggests that the disease must manifest itself at the hotel.

In his view, that is the way in which the words would be understood by a reasonable person in the position of the parties at the time the policy was agreed.

He did not accept that the use of the word “at” in the clause suggested an approximate location.

The judge adjourned the case to April to consider whether further issues arise and, if so, what steps should be taken to bring the proceedings to a conclusion.