Insurer ‘should not be made cover pub losses’

No liability as virus started over 25 miles away – FBD

‘Never previously occurred’ ‘Very positive development’

IRELAND’S largest insurer has said it should not have to cover any Irish pub’s losses due to Covid-19 because the pandemic originated more than 25 miles from the pub door.

Four pub owners have taken FBD Insurance to court in a row over insurance cover during the pandemic.

More than 1,000 pubs and bars all over the country could be affected by the dispute, which arose after the insurer refused to provide them with cover since the pandemic resulted in the closure of businesses in mid-March.

The four pubs – three in Dublin and one in Athlone – began legal proceedings before the Commercial Court yesterday, arguing that their insurance policies cover disease outbreaks. All are insured for more than €1million.

In legal documents seen by the Irish Daily Mail, FBD argues that the pubs’ policies only cover diseases that originate within a range of 25 miles from the pub door.

The case could cost FBD hundreds of millions of euro in payouts to the 1,077 pubs it insures, and threatens to expose other insurers to similar liabilities.

A senior FBD accountant swore an affidavit in which he pointed out that a pub’s insurance policy could not cover a global pandemic and nationwide shutdown.

Outlining FBD’s case, the accountant said that the insurer’s policy covers profit and loss, the increase in the cost of working, and the costs of hiring an auditor to calculate a claim if a government authority closes the pub due to food or drink poisoning, defective sanitation, vermin or pests, or ‘outbreaks of contagious or infectious diseases on the premises or within 25 miles of same’.

The FBD accountant wrote that Covid-19 is, by its nature, scale and consequences, entirely different from the outbreaks of contagious or infectious diseases on the premises or within 25 miles, adding: ‘Cover for a pandemic is very different from cover for localised outbreaks of infectious diseases that affect individual public houses. A nationwide closure of businesses has never previously occurred.’

Michael Cush SC, who represents the three Dublin bars, told Judge David Barniville that three of the pubs are seeking an early trial.

The three Dublin plaintiffs are Aberken, trading as Sinnotts Bar at the Stephen’s Green Shopping Centre; Hyper Trust Ltd, trading as The Leopardstown Inn; and Inn on Hibernian Way Ltd, trading as Lemon & Duke in Duke Lane.

The Athlone plaintiff is Leinster Overview Concepts Ltd, which trades as Sean’s Bar. Mr Cush said each plaintiff has an identical insurance policy with FBD.

The case concerns whether a ‘consequential loss’ has been triggered by the coronavirus and, if it has been triggered, what then are the correct principles to use in calculating damages.

Mr Cush added that three of the plaintiffs – Sinnotts Bar, The Leopardstown Inn and Sean’s Bar – wanted their cases placed on the Commercial Court list and were seeking an early trial because of the urgency of the cases and the fact that there are over 1,000 pubs affected by the dispute.

Judge Barniville said he was satisfied that these are commercial proceedings with very significant commercial interest. He set a trial for October 6, for the cases involving Sinnotts Bar, The Leopardstown Inn and Sean’s Bar. The trial is scheduled to last three weeks.

The court was told that in the remaining case involving Lemon & Duke, mediation has been scheduled. As a result an adjournment was being sought for two weeks.

A legal source said that if mediation is not successful, the Lemon and & Duke case will likely join the others in the October trial.

Representing FBD, Paul Gallagher SC said that there is a clause in the insurance contracts which could lead all parties to arbitration, rather than court.

However, FBD is not seeking to stay the trial in the case of Sinnotts Bar, The Leopardstown Inn and Sean’s Bar because there are over 1,000 bars seeking direction on the coronavirus issue. FBD said in a statement after yesterday’s court hearing that it has applied for a stay on all other similar proceedings ‘with the aim of using this case to seek a determination in court to the overall question of whether losses due to Covid-19-related closure, claimed by public house owners, are covered by their FBD policy’.

‘We view this as a very positive development. This course was initiated by FBD Insurance as it provides the best opportunity to expedite the matter and achieve clarity for all involved,’ the company added.

The Licensed Vintners’ Association and the lobby group Insurance Ireland said they would not be commenting on the case.