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Law360, London (April 17, 2020, 2:36 PM BST ) Nightclubs struggling under the nationwide coronavirus lockdown will explore legal options after insurers refused to pay out on claims for business interruption that they say are valid, a trade body for the sector said.
The Night Time Industries Association, which represents bars, nightclubs and hosts of live music concerts, named insurer NFU Mutual and underwriter Eaton Gate on Thursday as two companies that have refused to pay out.
It follows the possibility that group litigation could be launched against Hiscox Insurance after it refused business interruption claims.
Michael Kill, chief executive of the association, admitted that some insurance claims were "not legitimate." But other policyholders who appeared to have the required cover had seen their claims rejected.
"There are a considerable number of businesses who are being denied valid insurance claims, being disputed by certain insurers in the hope that the current financial situation will deter them from challenging the claim," he said. "These actions have not gone without notice and will be challenged at a greater scale in the coming weeks."
The association's broker, NDML, said insurers owe a duty to loyal customers.
"We are taking a stand on behalf of the industry by funding a substantial legal review of insurer wordings," Simon Mabb, managing director of NDML, said.
Stephen Finch, managing director of London bar Vagabond Wines, was quoted in the association's release as saying that underwriter Eaton Gate had refused a £1.3 million ($1.6 million) business interruption claim, despite having "notifiable disease" cover on the policy.
Eaton Gate could not be reached for comment.
The release also quoted Howard Spooner, owner of the George Hotel on the Isle of Wight, who said that his insurer, NFU Mutual, had also denied cover.
A spokesman for NFU Mutual told Law360 that the hotel had cover against the closure of the premises by public authorities, a so-called prevention of access clause. But he said that was restricted to an incident "happening within the specified radius from the insured premises, and not by a nationwide event or global pandemic."
"The lack of cover for pandemics like COVID-19 is not a U.K. phenomenon, nor is it restricted to NFU Mutual," the spokesman added. "No insurance market can afford to underwrite the scale of losses a pandemic can bring, and policies reflect that reality."
--Editing by Ed Harris.
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