Greggs wins £150m landmark High Court Covid insurance case

Greggs, the bakery chain, has won a landmark ruling in its legal battle over a £150 million pound insurance claim triggered by the coronavirus crisis.

A High Court judge yesterday backed the majority of the FTSE 250 company’s claim for business interruptions caused by the pandemic, in a move that could cost Zurich Insurance tens of millions more than it argued was its liability.

Lawyers for Greggs, which employs about 25,000 people across more than 2,200 shops in the UK, said that each outlet suffered some interruption or interference with trading as a result of government lockdowns imposed to combat Covid-19. The chain claimed more than £150 million on its policy with Zurich, arguing that it had suffered many instances of business interruption.

However, Zurich argued that all of the chain’s losses could be traced to a “single occurrence”, for insurance purposes, which would cap the bill for the insurer at £2.5 million. In January last year the company said that it had discharged its obligations to Greggs after it paid the chain that sum.

The court heard that Greggs announced on March 23, 2020 that it was closing all its shops to protect customers and staff from the virus. The shops stayed shut until late May, when bosses began a phased reopening. Lawyers for Greggs argued in court that subsequent restrictions imposed by ministers, combined with the effects of the virus, created more business interruption losses.

At the High Court in London, Mr Justice Butcher agreed that there was more than a single occurrence of business interruption and said he hoped the “parties will be able to agree as to the number”. However, the judge — who handed down two other rulings on similar issues regarding the Stonegate Pub Company and Various Eateries Trading — said that if Greggs and Zurich could not agree on the number of occurrences, he would have to hear arguments.

Manoj Vaghela, a partner at Charles Russell Speechlys, the law firm representing Greggs, said the ruling had “wider implications for all businesses that purchased the resilience insurance policies”. The lawyer said Zurich’s argument “has been firmly rejected”.

Greggs had revenues last year of nearly £1.23 billion.

Zurich said the company was reviewing the judgment and had no further comment.