‘Confusing’ insurance policy should cover Covid disruptions, court says


A business interruption insurance policy is “riddled with obscurity and confusion” and should be interpreted as Covid-19 disruption coverage, the commercial court said.

Richard Kean SC made this point on Tuesday when a hotel opened a case against an insurer and broker based in Slovenia.

The case has implications for several similar businesses that have been shut down by the pandemic, the lawyer said.

Coachhouse Catering Ltd, which operates the Old Imperial Hotel in Youghal, County Cork, has taken action against what it says is the refusal of insurance company Zavarovalnica Sava to provide compensation for losses suffered in as part of a business interruption insurance policy provided by the company. .

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

“Almost lost my mind”

Coachhouse claims to be entitled to compensation under the policy for interruption / loss after March 15 of last year when the first foreclosure was announced.

He also claims that the order to close from that date constituted loss and / or destruction and / or damage to the property which he uses for business purposes.

He claims damages for alleged breach of contract, including aggravated and / or exemplary damages.

The defendants reject the allegations.

Opening the case, Mr Kean said Zavarovalnica Sava is an insurer and reinsurer which made a net profit of 47.6 million euros 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 didn’t have the peace of mind, they almost lost their minds,” the lawyer said.

The heart of the Coachhouse case is that the hotel closure caused losses and the insurance policy was “riddled with ambiguity,” he said.

The defendants themselves did not know what the policy was, he said. As a policy “riddled with obscurity and confusion,” it must be interpreted in favor of its client, the lawyer said.

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

In cross-examination, Alan Grace, a retired insurance expert on behalf of the defendants, said that before Covid, pandemics like SARS and swine flu were “on the horizon” and some insurers chose to take them up. include while others have sought to reduce their coverage. In general, however, they did not put pandemic exclusions into the policy, he said.

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

The case continues before Judge Denis McDonald. It is heard, both in physical hearing and at a distance, via the TrialView system.

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