Things between Zurich and Greggs heat up as insurer insists on slicing bakery’s £100m covid claim to £2.5m
Zurich Insurance has retaliated in a London court against a claim by bakery chain Greggs for between £50m to £100m in payouts for Covid-19 related losses, according to reports.
The insurance giant told the court that its business interruption cover went up to £2.5m for a single event, according to Legal 360, which first reported the news.
In a High Court filing last week Zurich Insurance insisted that it was not liable to pay Greggs up to £100m for the bakery’s losses during lockdowns, when it was forced to shut some 2,000 stores across the country.
Zurich said it had already fulfilled its obligation to its client when it paid out £2.5m in January, but Greggs submitted a legal claim in October, arguing that each government announcement of lockdowns or restrictions should be treated as separate triggering events under the policy.
As such, according to Greggs, Zurich should pay out for each separate event at its franchise stores. The cost could run into £100m, Greggs had estimated.
But in the latest court proceedings Zurich has defended its position and maintained that the outbreak of Covid-19 should be treated as a single event instead, for which cover is capped at £2.5m.
The ongoing dispute is one of many between businesses and insurers.
Last month Corbin & King, the owner of London’s Wolseley restaurant, was reportedly set to bring a lawsuit to Axa insurance over Covid-related losses, in a trial that could have wider ramifications for other UK businesses with similar policies.
The amount insurers paid out in claims to businesses that were forced shut during nationwide lockdowns hit £1bn in August, according to the Financial Conduct Authority (FCA).
The payouts followed a Supreme Court ruling in favour of policyholders in a test case on cover for business interruption which found that insurers were liable in most cases, especially when a policy offered cover for closure as a result of an outbreak of infectious disease – but it did not cover every type of insurance policy wording leading to a host of legal claims being made since.
“It is admitted that Greggs’ business will have suffered some interruption or interference during the period of insurance and that interruption or interference caused a single business interruption loss,” the insurer wrote in its defence filing, according to Legal360.
A Zurich spokesperson said the company was “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.”