An insurer was forced to indemnify a Munich restaurant for its closure due to COVID-19. The owner’s claim was successful before the Landgericht (LG) München, the Regional Court of Munich (Az.: 12 O 5868/20).

First, restaurant owners, among others, were forced to close their premises in the spring because of the coronavirus pandemic. Then the insurance companies refused to cover the losses despite the restaurateurs having taken out business closure insurance. However, insurers’ hopes of an easy ride were dashed. We at the commercial law firm MTR Rechtsanwälte can report that the Landgericht München ruled once again on October 22, 2020 that the insurer was obliged to indemnify the policyholder. This follows a ruling of the LG München from October 1 in a similar case in which the insurance company was forced to pay substantial compensation to a restaurateur from Munich.
In the instant case, the plaintiff restaurant owner had taken out business closure insurance and was subsequently forced to close the restaurant in the spring due to an order by the Bavarian State Ministry of Health and Care from March 21 in response to COVID-19. While the insurance company sought to avoid having to pay out, the LG München ruled against it.
The clause in the terms and conditions of insurance designed to limit the scope of the insurance coverage was found to lack transparency from the perspective of the policyholder and was thus deemed to be invalid. The LG München therefore concluded that the insurer would have to pay compensation in the amount of around 427,000 euros.
The court clarified that the obligation on the part of the insurer to indemnify did not depend on the legal form or legality of the closure order. Moreover, it was not necessary for COVID-19 to be present at the insured workplace. According to the general terms and condition of insurance, the only relevant factor was whether the workplace was closed based on the German Protection against Infectious Diseases Act (Infektionsschutzgesetz, IfSG). Such were the circumstances in this case, with the plaintiff’s restaurant having been completely closed and it not being reasonable to expect the business to continue operating on a legal basis as a takeaway business.
The court noted that if a clause in the general terms and conditions of insurance is to effectively limit the scope of the insurance coverage, the extent of the remaining insurance coverage needs to be made abundantly clear to the policyholder. This was not the case here.
The LG München held that neither government liquidity support related to COVID-19 nor short-time allowance were to be taken into account in determining the amount of compensation due.
A similar case saw a large restaurant and the insurance company reach an extraordinary agreement. The prospects of enforcing claims arising from business closure insurance policies continue to improve.

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