FBD and Covid-19: What did they intend to cover?
FBD have issued publicans with declinature letters confirming there is no cover. If they didn’t intend covering Covid-19, what did they intend to cover?
FBD Public House Policy
The extract below is from the FBD Public House policy – Section 3 – Consequential Loss on page 16 of the booklet. The Vintners policy contains the same wording. The relevant wording is highlighted below.
| The Company will also indemnify the Insured in respect of (A), (B) or (C) above as a result of the business being affected by:-
(1) Imposed closure of the premises by order of the Local or Government Authority following:- (a) Murder or suicide on the premises. (b) Food or drink poisoning on the premises. (c) Defective sanitary arrangements, vermin or pests on the premises. (d) Outbreaks of contagious or infectious diseases on the premises or within 25 miles of same. |
FBD Business Complete Policy
If we look below at the FBD Business Complete policy Section 2 – Business Interruption page 45;
A more up to date product offered by FBD which is specific and unambiguous with regard to indemnity, as it clearly outlines all the diseases which they cover. It also states that the disease must be at the premises. It is clear that the FBD Business Complete policy does not cover Covid 19 nor any Coronavirus, as they are not listed.
| H. Human notifiable diseases, murder or suicide :
This extension provides cover against business interruption resulting from the following:
Notifiable diseases
This extension does not cover: |
Underwriting logic
Assuming the list contained in the FBD Business Complete are diseases that FBD recognise and consider dangerous, how would any one of these diseases, if identified, force the closure of a public house 25 miles away? It would be akin to a bar in Dublin City Centre having to close because there was an outbreak of any of the diseases listed above in say Naas, Balbriggan or Greystones. It just doesn’t make any sense. If the policy stated that the outbreak had to be within 1 mile it may be understandable, but closure because of a disease occurring 25 miles away is simply not possible or credible. Not one of the above diseases would be so contagious for that scenario to occur. Therefore one can only assume that Covid19 or a similar type of disease is EXCATLY what FBD intended to cover in their Public House policy wording. There is just no reasonable alternative as to what they intended their policy to cover.
We note that both policies contain General Exclusions in line with all other insurance policies for Radioactivity, Sonic Bangs, War, Terrorism, and Cyber Risks. If they wanted to similarly exclude diseases such as Covid 19 or coronavirus it would have been very simple to include Pandemics in the General Exclusions.
It is clear that FBD may have been remiss in their Underwriting, if indeed it was their intention not to cover the likes of Covid 19. Leaving the Public House/Vintners wording in their policies for over 25 years, is clearly nobody’s fault but their own, as it is FBD who drafted the policy.
AXA Shops Office and Surgery policy
This AXA wording is broadly similar to the FBD Public House policy. AXA have confirmed they will deal with business interruption losses incurred by their policyholders under this policy.
The AXA Shops Office and Surgery policy contains the following wording in the Business Interruption Section:
| Murder Suicide or Disease
The Company shall indemnify the Insured in respect of Damage as defined in this Section resulting from interruption of or interference with the Business during the Indemnity Period following (a) any human infectious or human contagious disease (excluding Acquired Immune Deficiency Syndrome (AIDS) or an AIDS related condition) an outbreak of which the local authority has stipulated shall be notified to them manifested by any person whilst in the Shop Office or Surgery or within a 40 kilometres radius of it. |
Conclusion
Why should FBD consider it is right to avoid policy liability when their wording of the extension for Infectious Disease is so clear and unambiguous?
It is a well-established principle that any ambiguity in the wording of an insurance policy should be construed against the drafter of the policy (the Contra Proferentum rule). The Central Bank have repeated that recently in a letter to CEO’s of all authorised Irish insurers (click here). Let’s face it most people don’t read the small print and are not aware of what is or isn’t covered until a claim arises. When you read the FBD Public House policy wording in relation to infectious disease in the first section above, there seems no doubt but that the policyholder is covered.
There is never a wrong time to do the right thing.
I have worked for years in the insurance industry as a corporate underwriter and a corporate broker .
The business interruption policy with this extension cover the loss of profit in line with the definition for arriving at the loss amount .
Insurers will always try to decline a claim or reduce it. That why a good broker is worth their weight in gold .
Very true Valerie. It is always best to have good professional advice.