Restaurant Chain Makes £16M Business Interruption Loss Claim Against Their Insurers

A restaurant chain has brought a claim against its insurer, Allianz, for losses it suffered during England’s Covid-19 lockdowns, following the Supreme Court’s ruling in the high profile Financial Conduct Authority (FCA) business interruption test case which took place last year.

Various Eateries, which operates a number of restaurants, including Strada, Coppa Club and Tavolino, have argued in their claim, filed on 13th July, that Allianz cannot classify the lockdown restrictions as a single occurrence under their insurance policy and that the £2.5 million pay-out it received from the insurer for losses it ran up during the pandemic should instead be £16.4 million for each lockdown and each set of restrictions as they are each separate events under its policy.

Additionally, Various Eateries is arguing that pandemic events (e.g. lockdown restrictions and the tier system) fall into different categories in the insurance policy it has with Allianz and is consequently claiming losses under the following clauses in its insurance policy:

  • Prevention of access;
  • Enforced closure; and
  • Disease.

The restaurant chain is looking to obtain an indemnity of £15.8 million in losses due to a decline in its turnover, £520,000 as a result of an increase in working costs and £30,000 in legal costs preparing the claim.

Allianz has said in a joint statement with Various Eateries that they were both “collaborating with one another to seek judicial determination over a number of issues affecting Various Eateries’ business interruption claim for COVID-19 related losses”.

The insurer has added that the FCA test case did not address several key related questions concerning business interruption related losses as a result of the pandemic.

Disputes between hospitality groups and insurers

Since the Supreme Court’s ruling last September, which only covered certain policy wordings, hospitality groups have brought cases against their insurers in an attempt to argue that they should receive a pay-out, or an increased pay-out, under their insurance policies. In some cases, hospitality groups are claiming that each of their premises represents a separate loss under their policy.

Just last week, it was reported that the UK’s biggest pub group, Stonegate, is taking legal action against three insurers for losses it suffered during the pandemic and is seeking £845 million in compensation.

Like Various Eateries, Stonegate is arguing that their insurance policies, which cover business interruption and related losses, have been triggered multiple times during the pandemic. In the court papers, it states that the three insurers do not dispute that the insurance policies should have paid out, but dispute the extent of their liability, which they claim is limited to £17.5 million.

Stonegate estimates that its total business interruption and related losses between February 2020 and April 2021 were £481 million and further projects losses from April 2021 to 2023 — which is the indemnity period under the policy — to reach £365 million.

How Nelsons can help

Cathryn Selby is a Partner in our Dispute Resolution team.

At Nelsons, we offer fixed fee services for those uncertain of their business interruption insurance cover and/or are looking to respond to their insurer concerning any refused claims.

For further information, please contact Cathryn or another member of our expert team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.