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Law360, London (July 7, 2020, 5:39 PM BST) -- The owner of a string of bars and restaurants has sued insurer New India Assurance for refusing to fork out for business losses while the venues were forced to close during the government-imposed coronavirus lockdown.
K7 Holdings Ltd. said in a High Court suit that it is looking to claw back at least £390,000 ($490,000) that it lost when it shuttered four bars and restaurants in the central English town of Northampton on March 16, following government guidance issued in response to the COVID-19 outbreak.
The company said in its particulars of claim that it took out an insurance policy with New India Assurance Co. Ltd. on Feb. 25, which covered it for loss of income from any occurrence of a notifiable disease within a 25-mile radius of the venues.
The claimant said in the June 19 filing, which was recently made public, that it has lost at least £390,000 since March 16. And the bar and restaurant owner was forced to take out a £500,000 loan to keep the venues afloat because of subsequent cash flow problems, it said.
The owner said that it notified New India Assurance of the loss on March 16, but the general manager of the insurer rejected liability on May 28.
"In breach of the policy, the defendant has denied that the claimant's claims fall within the terms of the policy and that it is liable to indemnify the claimant," the company said in its particulars of claim. "Further, in breach of the implied term of the policy, the defendant failed to pay the sums due within a reasonable time."
The suit comes as the Financial Conduct Authority brought its own test case to the High Court to decide if insurers are liable to pay out to businesses interrupted by the pandemic for a range of contested policies.
The City regulator is seeking a definitive court judgment on 17 policy wordings, which could decide whether insurers pay out to hundreds of thousands of businesses forced to close when the country went into lockdown in March.
Representatives for K7 Holdings did not immediately respond to a request for comment. New India Assurance did not respond on Tuesday.
K7 Holdings is represented by Jeffrey Gruder QC and Freddie Onslow of Essex Court Chambers, instructed by Richard Leedham of Mishcon de Reya LLP.
Counsel information for New India Assurance Co. Ltd. was not immediately available.
The case is K7 Holdings Ltd. v. New India Assurance Co. Ltd., case number CL-2020-000380, in the High Court of Justice of England and Wales.
--Additional reporting by Martin Croucher. Editing by Rebecca Flanagan.
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