A landmark ruling by the UK Supreme Court on whether business interruption insurance covers claims related to COVID-19 is likely to have major implications for a similar case being taken against FBD Insurance in the Irish courts.

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

Claim for losses

The landmark ruling means hundreds of thousands of UK businesses will now be able to claim for losses incurred because of the Government’s lockdown restrictions, which forced many small businesses such as pubs, restaurants, hairdressers and non-essential retailers to close.

When the first COVID-19 lockdown started last spring, many of these businesses made insurance claims under their business interruption policy for loss of earnings due to the forced closures.

But many insurers refused to pay out on these claims, stating that the wording in their business interruption policies did not cover a global pandemic.

However, the ruling of the UK Supreme Court means UK insurance companies are now faced with a bill for thousands of claims that could run into the billions of pounds.

FBD case

Importantly, the ruling of the UK Supreme Court could have major implications for a similar case being taken against FBD Insurance by four pub owners.

If it were to lose the case, FBD has said it estimates the bill will be in the region of €30m

The four pubs taking the test cases against FBD include Sinnotts, the Leopardstown Inn and Lemon & Duke in Dublin, and Sean’s Bar in Athlone.

The ruling in the case taken against FBD was due to be announced this week but the Irish courts postponed judgement pending the outcome of the UK case.

FBD has 1,300 pub customers in Ireland meaning it has significant exposure should it lose the test cases. If it were to lose the case, FBD has said it estimates the bill will be in the region of €30m.

However, a number of market analysts believe the cost to FBD could be in excess of €100m depending on the ruling of the Irish courts.