By Martin Canny, Barrister, Law Library
The recent Coronavirus outbreak has put unprecedent pressure on our country, its people and its businesses. Many business owners have paid for “business interruption” insurance cover in the hope and expectation that their insurer would cover their losses in the event of an infectious outbreak leading to temporary closures, customer refunds, or loss of business. Anecdotally, in stories published in the national and weekend newspapers, and as outlined directly to ISME, it is clear that many insurers are not paying out on these policies.
There are a multitude of differently worded insurance policies for business interruption cover. Some ostensibly require a confirmed case of the infectious disease on the premises, and others require a diagnosis within 25 miles of the premises, and some require an express government order that the business in question close for cover to apply. ISME is not a law firm, but it is speaking to lawyers about what can be done.
Irish law does not facilitate “class action” lawsuits in the same way as the United States does. However, in recent years the courts have allowed groups of plaintiffs with similar cases raising similar issues to be “case managed” so that lead cases are identified for a determination of common legal grounds of challenge that benefit the subsequent cases. While there are many different issues that could arise in court challenges, the issues can be broken down into the following headings:
- Interpretation of policy clauses, some of which will be of application to many insureds, where policy terms require a definitive ruling. A properly presented argument supported with expert evidence will have a greater chance of success than a “lone wolf” argument;
- Arguments of general application arising under the law on fairness in insurance contracts. In the Central Bank Consumer Protection Code 2012, Chapter 2 applies to all customers and the other Chapters apply to “consumers” which includes companies with a turnover of up to €3 million. Other unfair contract terms legislation also exists, but for the most part it only applies to consumer contracts, with a narrower definition and excluding businesses. Many of these arguments of general application might benefit from their impact on a wide class of insured persons being captured in the same litigation.
- Specific representations by brokers or insurers that they would cover specific circumstances, such as one newspaper has stated is the case for certain FBD customers, where the insured will seek to hold the insurance company to what they were promised by the insurer or the broker as giving rise to a legal “estoppel” affecting their future conduct.
One thing that is certain is that the extent of cover provided under business interruption policies is sure to lead to many cases before the Courts, Arbitrators and the Financial Services Pension Ombudsman when the business and legal world resumes its activity again.