Test case begins against insurer RSA over Covid-19 business disruption cover

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Test Case Begins Against Insurer Rsa Over Covid-19 Business Disruption Cover
Action by a South Dublin hotel over its insurer's refusal to pay out on a claim for business losses caused by the Covid-19 pandemic has opened before the Commercial Court.
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An action by a South Dublin hotel over its insurer's refusal to pay out on a claim for business losses caused by the Covid-19 pandemic, has opened before the Commercial Court.

The action has been brought by Premier Dale Limited, trading as The Devlin Hotel in Ranelagh, Dublin 6 against insurance broker Arachas Corporate Brokers Ltd and insurer RSA Insurance Ireland DAC.

The hotel operator is part of the Press Up group of hospitality businesses which employs hundreds of people.

Today the first module of the case commenced, where Mr Justice Denis McDonald has been asked to interpret the policy of insurance entered.

The defendants deny the claims against them as alleged and the insurer says they are not obliged to pay out on the policy.

Test action for Press Up

Opening the case Paul McGarry SC, appearing with Jack Tchrakian Bl, for the hotel said the action is an important test action for Press Up and other companies that have similar policies with the insurer.

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Counsel said it is his client's case that while the policies of insurance were different thiis claim is very similar to one brought against FBD by four publicans.

Counsel added that where are differences, when it came to the interpretation of the RSA and FBD policies, those differences favour his clients.

The hotel argues the refusal to pay out on the business interruption claim has resulted in thebusiness sustaining "massive and mounting losses" without it being able to access funds from its insurer.

The claim arises from the hotel having to close its doors in March 2020 due to the health emergency caused by pandemic.

Contract of insurance

The hotel claims that it entered into a contract of insurance with RSA in October 2019.

Under that policy the hotel says it is entitled to be indemnified in respect of financial losses expected to exceed €1m arising from interruptions of business at the hotel.

Following the hotel's temporary closure, the operator sought to be indemnified in respect of its losses. In April 2020 RSA informed the operator that it was refusing to pay out.

The refusal by RSA to pay out amounts to a breach of the insurer's obligations under the 2019 contract.

The operator claims that Arachas provided it with advice and other services regarding insurance requirements.

The plaintiff says it relied on statements, representations and advices given to it by the broker in relation to the insurance contract it entered into with RSA.

The hotel's claims are all denied.

No obligation

The insurer, represented by Declan Buckley SC and Declan McGrath SC, claims that it is not obliged under the terms of the policy to pay out on the business disruption claim.

It says that under the terms of the policy there must be an outbreak of a notifiable infectious human disease on the insured premises, which did not occur in this instance.

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Arising out of the refusal to pay out the hoteloperator seeks damages for breach of contract, negligence, and negligent misrepresentation.

It also seeks a declaration that it is entitled under the terms of the 2019 insurance contract to be indemnified in respect of the financial losses from the interruptions of business since March 15th 2020.

It further seeks an order restraining RSA from refusing to indemnify the hotel operator and keep it indemnifying the hotel and keep it indemnified in respect of insurable losses.

The case continues.

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