
In this article we will analyse a recent judgement handed down by the Court of Granollers, in a claim filed by a hotel for loss of profit due to the closure of the establishment during periods of confinement by the COVID.
The case addressed by the judgement of the Court of first instance of Granollers, deals with a claim for loss of profit due to the closure of the activity on the occasion of the confinement by COVID and From the Insurance Law Department of Belzuz Abogados (Insuralex´s Exclusive Member in Spain and Portugal) we will analyse the aforementioned judgement.
The claim brought by the hotel’s lawyers against the insurance company consisted of a claim for damages suffered as a consequence of the closure of the establishment during the confinement by COVID. The losses claimed for ‘permanent expenses’ amounted to some €700,000 plus interest and costs. The defence arguments of the hotel’s lawyers focused on the coverage provided for in the specific conditions of the policy for 2019 and 2020, which establishes the risk of opening during the entire period. Therefore, the closure of the hotel’s facilities due to an incident and the consequent loss of profits should be covered, and therefore, as a consequence of the stoppage of activity caused by the pandemic, the ‘permanent expenses’ should be covered for the duration of the policy.
In response to these arguments in the lawsuit, the insurer’s defence acknowledged the validity of the policy, but indicated that the coverages of the policy had been erroneously interpreted by the plaintiff. Basically, they considered that the losses claimed should have occurred within the framework of the ‘Fire and complementary’ guarantee and its extension, as well as water damage, which means that losses as a consequence of the COVID-19 pandemic would not be included in any case. As an additional argument, reference was made to case law rulings that had already ruled on this guarantee, identifying it as a clause delimiting the insured risk, which implies that it can be opposed by the insured. The immediate consequence is that on the basis of this argument the claim had been rejected and no compensation was awarded.
The insurer admitted the existence of the insurance policy, but considered that the hotel made an incorrect interpretation of its contents. It was indicated that the losses to be compensated should be for the ‘Fire and supplementary’, ‘Extension of guarantees’ and ‘Water damage’ guarantees, without including the damages arising from COVID.
It was also indicated that case law had already determined that this type of guarantee is configured as a delimiting clause of the insured risk, and therefore it is opposable to the insured; additionally, it made mention of various Resolutions of Provincial Courts that had not granted compensation in similar cases.
In this regard, the rulings of the Murcia Provincial Court of 28 February 2022 and the Oviedo Provincial Court of 5 April 2022, are noteworthy in this context of claims on the coverage of loss of profits derived from COVID. The rulings in these judgments are favourable to the insurance companies.
It is worth noting that another issue of debate is additionally introduced regarding the coverage of loss of profits, if it is included in the policy as an autonomous pact.
However, not all the rulings that have been handed down are favourable to insurers, as was the case in the controversial ruling 59/2021 handed down by the First Section of the Provincial Court of Girona on 3 February, in which an insurance company was ordered to pay compensation of €6,000 to a pizzeria due to the cover included in its policy for the stoppage of its activity.
The essence lies in the lack of effectiveness of those limiting clauses included in a policy covering loss of profit due to total or partial interruption of the insured activity and which have not been expressly accepted by the insured.
As lawyers specialising in insurance law, we also find it interesting to highlight Ruling no. 140/2020, dated 2 March 2020, of the First Chamber of the Supreme Court, ruling on this issue, confirming its doctrine on this type of clauses, in the following terms:
‘1) This Court’s ruling 402/2015, of 14 July, which ruled on a similar limiting clause in an accident insurance policy, after interpreting the requirement of art. 3 LCS that the limiting clauses must be highlighted in an essential manner, interprets the other requirement, i.e. that they must be ‘specifically accepted in writing’, as follows:
‘With regard to the requirement that the limiting clauses must be ‘specifically accepted in writing’, it is a requirement that must concur cumulatively with the previous one (STS of 15 July 2008, RC 1839/2001), for which reason the policyholder’s signature is essential. As stated above, the signature should not only appear in the general contract, but also in the particular conditions, which is the document where the clauses limiting rights should normally appear’.
2) It follows from this jurisprudential doctrine that if, as in the present case, the particular conditions refer to the limiting clauses that appear in the general conditions that are given to the policyholder/insured, the latter must also sign these general conditions’.
In our opinion, all these arguments are well founded, combining precepts such as art. 3 and 63 of the Law on Insurance Contracts, but focusing on the ruling of the Granollers Court of First Instance ‘The arguments of the Provincial Courts do not contradict the application made at the time by the Provincial Court of Girona in a very particular and identical case to the present one, in which the General Conditions had not been delivered to the insured; This is the reason why the change of criteria followed by the said Provincial Court is due to the fact that, like the rest of the Provincial Courts, it is carrying out a generalised interpretation of the coverage of the loss of benefits clause, which does not open the door to its application to cases not covered in any case, but without this implying that the fact that the General Conditions had not been delivered to the insured person implies that their content is opposable to the insured person…’
CONCLUSION: The court issues this judgement because it understands that the fact that the General Conditions were not delivered to the insured implies an attack on the content of Article 3 LCS and the impossibility of applying the majority jurisprudence followed by the Provincial Courts, which would be applicable if the insurer had complied with the effective delivery of the General Conditions.
The failure of the insurer to deliver to the insured the complete policy, including both particular and general conditions, as well as other aspects related to regulatory compliance and transparency that must govern the distribution of insurance RD 3/2020, has its consequences, which makes it impossible to assert their defence arguments against the claims of the insured.
In view of the above, the Court of Granollers partially upheld the claim filed by the Hotel’s lawyers, recognising the occurrence of the claim for a period of 12 months and awarding compensation of approximately €500,000 (this ruling has been appealed on appeal by the insurer).
The insurance law department of Belzuz Abogados, S.L.P., as expert lawyers in insurance law, remains at your disposal for precise specialised advice on the matter.
José Garzón García
Socio -Departamento de Seguros
España y Portugal
BELZUZ ABOGADOS SLP, Insuralex´s Exclusive Member in Spain and Portugal