Insurers FDB do not have to cover any or all of the losses suffered by bars and restaurants due to the Covid-19 pandemic, the High Court has heard.

Declan McGrath SC for FBD said the business interruption policy was designed only to deal with a localised outbreak of disease and rejected the pubs’ arguments it is obliged under its policies to pay out on claims made by bars and restaurants.

Mr McGrath was making submissions to the court on the third day of what are important test cases brought by four pub owners over its refusal to indemnify them for losses suffered due to the Covid-19 pandemic.

The actions before the court have been taken by Dublin bars Aberken, trading as Sinnotts Bar; Hyper Trust Ltd, trading as The Leopardstown Inn; and Inn on Hibernian Way Ltd trading as Lemon & Duke.

The fourth action is by Leinster Overview Concepts Ltd, which trades as Sean’s Bar, in Athlone, Co Westmeath.

Mr McGrath said it is his client’s case that its polices of insurance do not provide cover for pandemics, and that the policy only covers localised outbreaks of disease.

Enforced temporary closure

However, should the court disagree with FBD’s view on the issue of coverage counsel said the peril in these cases is the period of the bars’ enforced temporary closure, and not the outbreak of Covid-19 itself.

The key event in terms of the insurance policies, counsel said, was the enforced closure order issued by the Government last March, Mr McGrath said.

If the court finds the insurers are obliged to pay out then it can only be for the period of the enforced closures, he said.

Mr McGrath said that the publicans were contending in their claims that they should be indemnified for all the losses they have sustained as a result of the pandemic.

Such a contention, he said. was “absurd”, and contrary to the basic principles of insurance as it would leave the plaintiffs in a better position than they were in before the event complained of.

Evidence, Mr McGrath said, will be given that prior to the Government’s decision last March that forced businesses to close temporarily, the bar and restaurant trade in Ireland had “fallen off a cliff”, due to fears over Covid-19.

Consequential losses

Evidence, he said, would be given on behalf of FBD showing that the bar and restaurant trade in countries including Sweden – where there was no enforced closure – also suffered significant losses over fears of contracting Covid-19.

The pubs claim that under their policies of insurance taken out with FBD they are entitled to have their consequential losses covered by what they claim is an insurable risk.

They also claim that the insurer is in breach of contract. The publicans claim the insurance policies taken out with FBD have a clause that states the pub owners will be indemnified if their premises are closed by order of the local or government authority if there are “outbreaks of contagious or infectious diseases on the premises or within 25 miles of same” .

That interpretation of the clause is disputed by FBD, who in April informed the pub owners that a pandemic does not fall within the scope of the clause.

FBD says the closures did not occur as a result of an outbreak of disease at the premises or areas where the pubs are located. After the parties concluded their opening submissions on Thursday, the court heard applications from the pubs to exclude expert testimony and reports that FBD want to include in support of their arguments.

The hearing before Mr Justice Denis McDonald continues.