On 3 February 2021, the Provincial Court of Girona issued Judgment 59/2021 in which an insurance company has been compelled to pay €6000 to the insured for the losses sustained by his restaurant as a consequence of the restrictions imposed by the Spanish Government following the Covid-19 crisis.
In this specific case, the insurance policy included cover for loss of earnings/business interruption (pérdida de beneficios/paralización de la actividad) where a daily compensation of €200 was to be paid during a period of 30 days (no deductible applicable) in the case of business interruption.
The insurance company argued that the policy wording does not expressly include cover for losses deriving from a governmental decision following a pandemic. The First Instance Court upheld this argument and dismissed the claim, making specific reference to an exclusion of the policy which stated that losses deriving from limitations or restrictions imposed by the public authority would not be covered.
The Provincial Court of Girona, however, has considered that - although the general conditions do not expressly mention cover for business interruption due to government restrictions taken in the event of a pandemic - the exclusion was a clear limitation of the rights of the insured in an adhesion contract, considering the contents of the contract and the reasonable expectations of the insured when contracting the policy.
As a consequence, the validity and enforceability of such exclusion – which the court considers to be limitative of rights – is conditional to the fulfillment of the formal requirements specified in Article 3 of the Spanish Insurance Contract Act (ie it has to be highlighted and explicitly accepted in writing by the insured) which, in this case, were not fulfilled. The judgment also mentions that the insurer did not argue whether the business interruption cover had to be linked to physical damage to the property, which leaves the door open to further interpretation in the future.