Two more legal actions brought over business interruption cover

Loughrea bar and Youghal hotel take insurer to Commercial Court

Action: Old Imperial Hotel in Youghal, Co Cork

Tim Healy

April 27 2021 02:30 AM

Two more Commercial Court cases have been brought over a refusal by an insurance company to provide an indemnity for business interruption insurance due to the pandemic.

Charlie's Bar, Loughrea, Co Galway, operated by Charwin Ltd, and the Old Imperial Hotel in Youghal, Co Cork, operated by Coachhouse Catering Ltd, have brought separate claims against Slovenia-based Zavarovalnica Sava insurance Company. The Old Imperial's company is also suing its Irish broker, Frost Insurance trading as Frost Underwriting UQuote.

Mr Justice David Barniville yesterday adjourned both cases to June for a hearing on a clause on arbitration in the policies which the insurance company has invoked.

Charwin is seeking declarations including that it is entitled to an indemnity under the policy for interruption/losses after March 15 last year when the first lockdown was announced. It also seeks a declaration that the closure order from that date constituted a loss and/or destruction and/or damage to the property it uses for business.

Charwin director Brian Winters said in an affidavit that Charlie's employs 17 staff, three full-time and 14 part-time in what had been a traditional ‘wet pub’ (does not serve food).

In an effort to mitigate losses, Mr Winters said they carried out significant work on the premises to provide substantial meals. On August 21 it was able to reopen as a ‘dry pub’.

It remained open until the October 21 lockdown, reopened on December 4 but closed again when the last lockdown was announced on December 24 and has not traded since.

The closures had resulted in losses of around €9,000 to €10,000 a week, he said.

In the Old Imperial Hotel action, it seeks similar declarations that it is entitled to be indemnified under its contract of insurance which ran from February 2020 to February of this year. It also seeks damages for breach of contract including aggravated and/or exemplary damages.

Dan Leahy, a director and manager of Coachhouse Catering, said in an affidavit that the defendants appeared, in declining the indemnity, to be making the case that the cover was for interruption to business as a result of damage to the insured premises.

Mr Leahy said his advice is that the meaning of "damage" in the policy was not clearly defined and Covid-19 has not been excluded from the policy. This ambiguity, he has been advised, should be interpreted in favour of the insured, he said.