French Court Orders Insurer AXA to Pay Restaurant’s COVID-19 Losses

PARIS — A Paris commercial court ruled that insurer AXA must pay a restaurant owner two months’ worth of coronavirus-related revenue losses, the restaurateur’s lawyer said on Friday, possibly opening the door to a wave of similar litigation.

AXA said it would appeal. It said there was a difference in interpretation over a specific type of contract signed by a several hundred restaurant businesses with a single brokerage.

Stephane Manigold, who owns four restaurants in Paris, was one of them. He filed a lawsuit requiring AXA to cover his operating losses after a government order in mid-March to close bars and restaurants to try to slow the spread of the virus.

“This is a collective victory,” he told Reuters after the ruling.

The court said that the administrative decision to close the restaurant qualified for insurance cover as a business interruption loss.

“This means that all companies with the same clause can appeal to their insurers,” Manigold’s lawyer, Anais Sauvagnac, said.

AXA has a 13 percent market share among French craftsmen and merchants. AXA said it had in its portfolio only 200 contracts with French businesses in various sectors that provide business interruption guarantees when there is no physical damage involved.

AXA said it was in the process of compensating those 200.

“The vast majority of AXA France contracts for catering professionals provide that a generalized event like the one we are experiencing today cannot bring into play the contractual guarantees,” AXA said in an emailed statement.

Insurers argue that pandemic risk is excluded from operating loss insurance guarantees because it is not insurable. French insurers would otherwise have to compensate 20 billion euros per month for operating losses due to the lockdown, industry estimates show.