BGH: Business closure insurance does not pay in case of COVID-19

In the course of the COVID 19 pandemic, numerous restaurants and hotels in particular were affected by officially ordered business closures. Until now, the question of whether a business closure or business interruption insurance policy covers the resulting damage has been unresolved. The higher courts have judged this question differently in various decisions. In most cases, it was based on whether the insurance conditions listed specific diseases or made general reference to the Infection Protection Act (IfSG), in which SARS-CoV-2 was not mentioned at the beginning of the pandemic.

The Federal Supreme Court (BGH) has now decided this question in its ruling of 26.01.2022 (IV ZR 144/21), at least with regard to those insurance contracts that refer to named diseases and pathogens, and denied coverage for damages caused by the closure of the business.

The clause in dispute states:

"The insurer shall pay compensation if the competent authority closes the insured business or an insured business premises on the basis of the Act on the Prevention and Control of Infectious Diseases in Humans (Infektionsschutzgesetz - IfSG) in the event of the occurrence of notifiable diseases or pathogens (see No. 2) in order to prevent the spread of notifiable diseases or pathogens in humans."

The aforementioned No. 2 then continues to state:

"Notifiable diseases and pathogens within the meaning of these supplementary terms and conditions are the following diseases and pathogens mentioned by name in the German Protection against Infection Act (compare §§ 6 and 7 IfSG)." (It follows a list of various diseases, but neither COVID-19 nor SARS-CoV-2 is among them.)

The BGH interprets this wording to mean that this is an exhaustive list of the insured diseases and pathogens. The mention of §§ 6, 7 IfSG only means that the insurer was guided by these standards when compiling the catalogue. Due to the extensive catalogue, however, it became clear that no reference, be it rigid or dynamic, was intended. In addition, the insurer also had a legitimate interest in determining the insured diseases and pathogens, since otherwise it would not be able to make an appropriate premium calculation in the case of diseases or pathogens that might only appear years later, as COVID-19/SARS-CoV-2 in particular shows.

According to this decision, at least for insurance contracts with similar insurance conditions, an obligation of the insurer to cover corresponding damages should be excluded.

However, the BGH clarified in its ruling that a business closure insurance could not only apply if the damage was caused by a hazard arising from the business itself; hazards caused by external circumstances could also be considered as an insured risk. Thus, a different decision is explicitly conceivable in the case of insurance contracts with differently structured conditions. In particular, insurance contracts with blanket references to §§ 6, 7 IfSG, i.e. without a concrete list of individual diseases, could be considered. For such contracts, a deviating interpretation would still be possible even after the BGH's decision.