In the midst of the covid-19 pandemic, it seems that insurers are back to business as usual – trying to avoid business interruption claims. A number of insurance companies provide business interruption cover to business who have paid premiums for years in the expectation that they would be covered when their business was interrupted. Every case may be different, but the behaviour of the insurance companies does not change.
So, if your business has a business interruption clause, I would suggest that you obtain legal advice. I have seen a number of policies where business interruption for pandemics is provided.
What is important is to read through the policy document in detail. If you have your insurance schedule only, then contact your insurer or broker and request a copy of the Policy Document. The detective work can then begin in earnest in order to successfully bring your business interruption claim.
I understand that some insurers have attempted to rely upon the strange legal mechanism whereby businesses were closed. You might recall that this was initially done by Ministerial request or recommendation rather than by operation of law. The insurers attempted to rely on this quirk to avoid claims brought by responsible businesses who complied with the instruction of the Minister for Health to close down. They sought to argue that the businesses were not “closed by government mandate” as required in some policies.
The Regulation known as the Health Act 1947 (Section 31A – Temporary Restrictions) (Covid-19) Regulations 2020 is different to the Orders imposed in other countries that explicitly required businesses to close. The Regulation instead prevents people leaving their houses without “reasonable excuse”, and the list of possible reasonable excuses and essential businesses and services are then set out. Fortunately, the Central Bank, which regulates insurance companies, has directed by letter dated 27th March 2020 that Government advice to close a business is to be treated as a direction. So this should scupper that argument and the insurance companies have now pivoted to other perceived loopholes.
One such argument is a requirement in some policies, that the business is closed due to a pandemic within a stated distance of the premises. It is suggested by the insurance company that the pandemic is national and global, and therefore not within that radius. Well, hopefully for those businesses concerned, there was an infection within the radius at the time of the closure and this loophole is therefore closed off. The insurance policy document was drafted by the insurance company and the legal doctrine of “contra proferentem” also known as “interpretation against the draftsman” comes into play. This is a doctrine of contractual interpretation providing that, where a term is ambiguous, the preferred meaning should be the one that works against the interests of the party who drafted it. So it will be interpreted against the insurance company and in favour of the person who has been paying insurance premia for years in the expectation of having insurance cover. This should hopefully scupper this rather artificial interpretation being suggested by the insurance company.
I encourage all businesses who have business interruption policies to take legal advice on bringing an immediate claim for business interruption. If you have a business in Ireland and you have closed as a result of Government directions, then I urge you to contact your Solicitor for advice. If you wish, email me a copy of your policy document and I’ll give you a view and assist if possible.
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