The Commercial Court has today begun hearing an action by four pubs against FBD Insurance in a dispute over whether or not their insurance policies cover the disruptive impact of Covid-19 on their businesses. 

The pubs that have instigated the legal action are Dublin bars Aberken, trading as Sinnotts Bar; Hyper Trust Ltd, trading as The Leopardstown Inn; Inn on Hibernian Way Ltd trading as Lemon & Duke and Athlone based Leinster Overview Concepts Ltd, which trades as Sean's Bar. 

Opening the case for Aberken, Hyper Trust and Inn on Hibernian Way, Senior Counsel Michael Cush said 1,100 firms have policies with FBD which are identical to the policies at question in the case. 

The outcome of the case will therefore be determinate in those 1,100 cases, he said, as well as being influential in the resolution of a great number of other claims involving other insurers. 

For individual pubs the case might be the difference between being able to stay in business or not being able to do so, he claimed. 

For FBD, it has potentially significant financial implications, Mr Cush added. 

But neither of those eventualities should inform the court in reaching a conclusion as to the proper construction of the policies, he told Mr Justice McDonald.

We need your consent to load this rte-player contentWe use rte-player to manage extra content that can set cookies on your device and collect data about your activity. Please review their details and accept them to load the content.Manage Preferences

Mr Cush said there are are four core issues at question. 

The first is has any cover been triggered, while the second is, if so, what is the scope of the cover provided by the policies or what is the "insured peril"?

Third, he said, if there is cover, what thinking about what happened or did not happen should be used to determine the loss to the insured?

And fourthly, he said, what is the correct interpretation of an application of the trends clause in the policy?

Mr Cush said there is broad agreement between the two sides that these are the main issues to be determined by the court, but they differ on their views on them.

On point one, he said, FBD's view is that there is no cover at all, for two reasons.

First, he said, the insurer claims the cover provided by the policy extends only to local outbreaks of the disease and not to what FBD describes as a national pandemic.

He said FBD also argues the imposed closure was in response to the national situation and was not therefore following an outbreak of Covid-19 on the premises or within 25 miles.

In relation to the second issue about what is the scope of cover, the FBD position is that it only extends to losses directly attributable to the imposed closure and does not extend at all to losses attributable to the disease in all its manifestations, Mr Cush said.

On the third issue, Mr Cush said the two sides agree on the approach, and therefore if FBD is correct you strip out only the losses attributable to closure and leave in all the losses attributable to the disease and the Government measures in response.

On that analysis, Mr Cush said, the recoverable loss would be the difference between being closed and being open but operating in a pandemic.

He added that, by the same analysis, if the plaintiffs are correct in saying the scope of the cover extends to the disease, then one strips out the losses attributable to the closure and the wider effects of the disease. 

In such a situation, which the plaintiffs prefer,  the recoverable losses would be the difference between operating in the current circumstances including closure and operating normally, based on last year's performance. 

The answer to issue two on the scope of cover determines the answer to questions three and four, he told the judge.

Because of a limit of 20 on the numbers allowed in the court due to social distancing reasons, the case is also being streamed to interested parties online.

The case is expected to last around 20 days.

FBD has previously said it has more than 1,300 pub customers on its books and has received over 700 claims under the business interruption extensions of its business insurance policies.

The insurer has already put aside €30m to cover potential costs arising from the case.

In court today, Mr Cush referred to policies and documents issued by FBD which stated that disease was covered. 

However he said FBD was telling the court that it was not covered, and if there was any cover it was only for enforced closure and did not include the impact of the disease itself. 

He also pointed to how FBD does not say anything in the policy document about what is not covered, nor does it mention disease in the section on restrictions on cover. 

This document is the exact opposite to the argument that FBD are advancing, he said. 

He also referred to a Features and Benefits document that provided a summary of cover available under FBD's public house insurance policy.  

In the Consequential Loss (Business Interruption) section of that document, disease is included, he claimed.