The case-law concerning the obligation of a provider of business closure insurance to indemnify in response to the coronavirus lockdown is not consistent. The Landgericht Düsseldorf has now given its verdict on the matter, ruling in favor of the policyholder. We at the commercial law firm MTR Rechtsanwälte can report that an insurance company has been made to pay out on a business closure insurance policy, with two bar operators set to receive more than 760,000 euros.

The two plaintiffs in the case run three bars in Düsseldorf’s Altstadt (“old town”). They were required by a decision of general application adopted by the state capital to close the bars due to the coronavirus pandemic. They had taken out business closure insurance for the bars as far back as 2017 and 2018. Yet, despite the forced closure of the bars during the first coronavirus lockdown, the insurer did not wish to pay out for the loss of revenue. It argued that the policy only covered illnesses that were explicitly listed in the German Infection Diseases Protection Act (Infektionsschutzgesetz, IfSG) at the time the bars were closed, noting that the legislation did not mention COVID-19 at that time.

The bar operators’ lawsuit demanding a payout on the insurance was successful. The LG Düsseldorf affirmed the insurance cover for the three bars, ruling that the insurer would have to pay out around 760,000 euros altogether.

The court held that the bars had been required to close from March 18, 2020 in response to a decision of general application adopted by the City of Düsseldorf, and that their closure had given rise to an insurance claim. Moreover, the approved alternative of pursuing takeaway business was not part of the bars’ core business model, with the court finding that this option was not economically feasible and need not have been implemented by the bars’ operators.

The LG Düsseldorf concluded that the insurance did in fact cover the instant case, even though the coronavirus had, of course, not yet been listed in the Infektionsschutzgesetz at the time the decision of general application was adopted on March 18, 2020. The clause in the insurance terms limiting insurance claims to those citing the pathogens explicitly mentioned in the old IfSG legislation was said to place the policyholder at an unreasonable disadvantage, and it was therefore found to be invalid under the terms of section 307 of the German Civil Code (Bundesgesetzbuch, BGB). The judgment may yet be subject to an appeal.

The courts have arrived at different conclusions regarding the obligation of a provider of business closure insurance to indemnify. Experienced lawyers can provide counsel in connection with legal disputes with insurers.

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