Bakery chain giant, Greggs, has begun legal proceedings against its insurer, Zurich, totalling £100million for losses it incurred during the pandemic under its business interruption policy.
The claim, which was filed with the High Court on 25th October but has only been made public this week, states that Greggs believe that it is owed £50million to £100million to cover losses it incurred as a result of its 2,200 plus stores having to close due to Covid-19 restrictions.
Within their claim, Greggs has said that Zurich has improperly capped the pay-out at only £2.5million. The insurer is arguing that the pandemic is one ongoing event for the purposes of insurance coverage, and the business interruption insurance policy puts a £2.5million cap limit on each individual event.
However, Greggs disagree with this and is arguing that each Covid-19 lockdown or set of restrictions constitutes a separate trigger event under its insurance policy. Additionally, each coronavirus government announcement amounted to an insured event under separate heads of business interruption cover, which are:
- The disease peril clause; and
- The prevention and enforced closures clauses.
As a result of the above across all of its stores, Greggs has said that it should receive a pay-out from Zurich amounting up to £100million.
In light of the legal action taken by Greggs, a spokeswoman for Zurich said:
“We are aware of High Court proceedings in relation to our client Greggs. Zurich is confident we have responded to this claim fairly and consistently with the test case brought against the insurance industry last summer. As this is an ongoing legal issue, we are unable to provide any further details.”
Greggs has declined to comment.
FCA business interruption test case
The legal action being taken by Greggs is the latest battle between businesses and insurers concerning Covid-19-related pay-outs following the High Court and Supreme Court’s rulings in the landmark business interruption test case, which was brought by the Financial Conduct Authority (FCA) against eight of Europe’s largest insurers.
The Court’s found that in the majority of cases that insurance policies should cover business losses caused by lockdowns and Government Covid-19 restrictions and businesses should receive pay-outs from their insurers.
Greggs has stated that its business interruption policy with Zurich was materially similar to the one examined by the High Court and Supreme Court.
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 in relation to 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.