Cork hotel’s insurance claim for Covid disruption dismissed by High Court

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A Cork hotel operator’s claim that its insurance policy covered it for business interruption caused by Covid-19 lockdowns has been dismissed by the High Court.

Judge Denis McDonald’s decision is considered a test case for similar insurance policy claims.

The case was brought by Coachhouse Catering Ltd, which runs the Old Imperial Hotel in Youghal, Co Cork, following Slovenian insurance company Zavarovalnica Sava’s refusal to pay compensation for losses it said were planned in the insurance policy.

Coachhouse also sued Irish broker Frost Insurance, trading as Frost Underwriting UQuote, which did not take part in the police interpretation module of the case and which Judge McDonald ruled on Tuesday. . Other questions in the case have been left for another module.

Coachhouse paid €7,369 plus €1,122 in underwriting fees and taxes for the policy. It provided for an operating loss guarantee within the limit of €915,000 per 12-month period.

Coachhouse made a claim under the “Business Interruption and Loss of License” sections of the policy following the temporary closure of the hotel in March 2020 following government measures in response to the pandemic. He claimed the policy was “riddled with ambiguity”.

The insurer denied the claims.

Judge McDonald, in dismissing the hotel’s claims, said the court was required to look at the contract as a whole.

Evidence of the parties’ subjective intent (when the policy was purchased was inadmissible, he said.

Instead, the court approached the process of interpreting the contract by putting itself in the shoes of a reasonable person in the position of the parties at the time the contract was entered into and that person is deemed to know the elements of relevant fact and law. Context.

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Coachhouse argued that the use of the word “damage” in the policy was not limited to loss or destruction of property used on its premises or damage to such property and that it would extend to loss use of property, the judge said.

The judge said that argument must be rejected.

He also concluded that there must be physical damage to the property in order to trigger coverage under the relevant section of the policy. It follows that public health measures introduced in response to the pandemic do not constitute “harm” within the meaning of this article, he said.

There was no cover for losses resulting from Covid-19, he said

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