OLG Karlsruhe rules on business closure insurance provider“s liability for closures related to COVID-19
In a ruling of June 30, 2021, the Oberlandesgericht (OLG) Karlsruhe – the Higher Regional Court of Karlsruhe – found a provider of business closure insurance liable to pay out in response to a closure related to COVID-19 (ref.: 12 U 4/21).
In order to stem the spread of the coronavirus, restaurants and hotels have at times been forced to close by the authorities. Whether the provider of business closure insurance is liable to pay out in these cases is a matter of dispute. We at the commercial law firm MTR Rechtsanwälte can report that while the regional courts of Munich and Düsseldorf have answered in the affirmative, the OLG Karlsruhe has stated that it essentially comes down to the wording of the insurance conditions.
In a case that came before the OLG Karlsruhe (ref.: 12 U 4/21), a hotel with an associated restaurant had been forced to close temporarily due to the pandemic. The terms and conditions of the business closure insurance policy that was taken out in January 2020 made multiple references to the German Act concerning the Prevention and Control of Infectious Diseases (Infektionsschutzgesetz, IfSG), according to which insurance cover is to be provided in the event of an outbreak of notifiable diseases or pathogens if these are listed by name in the Act. Since COVID-19/SARS-CoV-2 was not listed, the insurer did not wish to pay out.
However, the OLG Karlsruhe did not play along, ruling that the attempt to limit the insurance coverage to an exhaustive catalog of diseases and pathogens that falls short of the scope of the IfSG was not sufficiently clear and understandable. The clause was found to be in violation of the statutory requirement for transparency and was therefore invalid. The repeated references to the IfSG in the insurance terms and conditions were said to have given the policyholder the impression that any business closure justified on the basis of the IfSG was covered by the insurance, and yet the fact that there were restrictions was not made clear enough. Having found the clause to be invalid, the OLG Karlsruhe concluded that COVID-19/SARS-CoV-2 was also covered by the insurance.
In another case, however, the OLG Karlsruhe arrived at a different conclusion (ref.: 12 U 11/21). There was no mention in that case of the IfSG anywhere in the insurance conditions of the business closure insurance policy that had been taken out in 2019. Instead, the insurance conditions included a provision expressly stating that notifiable diseases and pathogens within the meaning of the contract in question were „only“ those listed in a subsequent catalog, with COVID-19/SARS-CoV-2 not being listed. The Court held that the clause in this case was unambiguous and that the policyholder was not unreasonably disadvantaged.
Whether a provider of business closure insurance is liable to pay out depends on the circumstances of a given case. Experienced attorneys can provide counsel in the context of legal disputes with the insurer.
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