The High Court has ruled against FBD Insurance in a landmark legal case taken by four publicans over FBD’s interpretation of its business interruption cover.

The High Court ruling, handed down on Friday morning by Mr Justice Denis McDonald, states that FBD must pay out on insurance claims made by publicans relating to the forced closure of their premises due to COVID-19 restrictions.

The dispute arose after FBD Insurance had initially rejected insurance claims from pub owners, stating its business interruption policy did not cover a global pandemic.

This resulted in four pubs (Sinnotts, the Leopardstown Inn and Lemon & Duke in Dublin, and Sean’s Bar in Athlone) taking court proceedings against FBD.

Losses

Each of the pub owners claimed that the losses incurred following the forced closure of their businesses due to COVID-19 guidelines should be covered by business interruption insurance.

The High Court ruling means FBD Insurance, as well as other insurers in the Irish market, must pay out on insurance claims by pubs related to the disruption caused to their businesses by COVID-19.

The ruling is likely to have implications for thousands of publicans in Ireland, as well as other small businesses that were forced to close.

FBD has 1,300 pub customers in Ireland, meaning it has significant exposure to claims from publicans.

However, it’s understood FBD has reinsured most of these policies with large-scale insurance houses, meaning its financial liability from the ruling is likely to be limited.

The company said it has set aside up to €30m to cover the potential losses from claims for business interruption cover. Shares in FBD have dropped slightly on the back of the ruling to below €7 per share.

UK ruling

In January, the UK Supreme Court handed down a similar ruling on business interruption insurance, which undoubtedly influenced the decision of the Irish courts.

The UK Supreme Court ruled that thousands of policyholders in the UK with business interruption cover are eligible to make insurance claims for losses caused by the COVID-19 pandemic.