Court rejects claim for interruption of hotel insurance

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The High Court has dismissed a challenge by a Co Meath hotel against insurer Zurich’s refusal to pay a claim for business disruption caused by the Covid-19 pandemic.

The action was brought by the 260-room, 4-star Headfort Arms hotel in Kells Co Meath, which claimed to have entered into an insurance policy with Zurich in October 2019.

Zurich opposed the action and said the policy underwritten by the hotel did not cover a claim for business disruption caused by the pandemic.

In his judgment, Judge Denis McDonald said he was satisfied that the claim made by the hotel did not fall within the coverage available under the Zurich policy.

The family-run hotel claimed that under its policy with Zurich it was entitled to compensation for disruptions to its business, including forced closure, due to the pandemic.

In its action, the hotel sought various orders against Zurich, including damages for breach of contract and intentional interference with economic interests, as well as a declaration that it is entitled to compensation from the insurer.

The hotel also sought orders directing Zurich to compensate the hotel for the losses it had suffered.

Zurich Insurance Plc opposed the action and argued that the policy did not cover losses suffered as a result of Covid-19 and only intervene in the event of damage occurring on hotel premises.

He also argued that the hotel had not requested coverage under any of the relevant business interruption extensions offered by Zurich, which specifically provided coverage for business disruptions caused by reportable illnesses. obligatory.

Zurich added that at the time the policy was put in place there were a number of competing policies available in the market that covered business disruptions caused by illness.

In his ruling, Justice McDonald said the case presented by the hotel involved a very tense and unnatural reading of the provisions of the policy.

There was nothing in the relevant factual or legal context that supported the hotel’s interpretation of the policy, the judge added.

The judge said that under the policy he made with Zurich, the hotel was not entitled to compensation due to temporary deprivation of property.

He had failed to demonstrate that his inability to operate his business during the shutdown could be defined as “damage” to the police.

The hotel, he added, could have, but did not ask for, a policy that specifically covered business disruptions.

As a result, the judge said the only order the court could make was to deny the hotel’s claim.

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