Business Interruption Insurance Policies – High Court rules against FBD Insurance - 5 February 2021

Cosgrove Gaynard Solicitors

Mr Justice Denis McDonald ruled in the High Court this morning that FBD Insurance are to compensate the policyholders who took court action following FBD’s refusal to provide indemnity under their policy of insurance regarding business disruption cover.

Mr Justice Denis McDonald ruled in the High Court this morning that FBD Insurance are to compensate the policyholders who took court action following FBD’s refusal to provide indemnity under their policy of insurance regarding business disruption cover.

FBD had taken the stance that the policy of insurance in question did not cover the disruption caused to businesses by the Covid-19 pandemic. FBD argued that it never provided cover for pandemics and that a policy covering such an event was never requested previously in this jurisdiction. The policy holders argued that they were entitled to be compensated for their consequential losses for what they considered to be an insurable risk.

The High Court disagreed with FBD’s stance and interpretation of its policy. Judge McDonald opined that cover is not lost where the closure of the business affected is prompted by a nationwide outbreak of a disease provided that the outbreak is within a 25-mile radius and is the reason for the closure of the affected business.

The decision this morning by Judge McDonald was eagerly awaited. His decision was deferred previously to allow parties make submissions to the Court in light of the recent UK Supreme Court Judgment on the 15th January 2021 where it was found that policyholders in the UK are able to recover losses for business interruption caused by the Covid-19 pandemic.

The decision will be welcomed by some 1000 Irish businesses who have made similar claims due to the onset of the Covid-19 pandemic.

The next issue for the Court that will naturally follow today’s judgment will be quantifying the losses that have been incurred by the respective policy holders in the matter. Judge McDonald ruled that this would be considered at a later date.

Please click on the following link to view the full judgment delivered today:

https://www.courts.ie/acc/alfresco/8bfaa5dd-3ea3-4580-979f-0dfb2d8243be/2021_IEHC_78.pdf/pdf#view=fitH

 

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