Courts across Spain have steadily addressed pandemic-era insurance claims, clarifying how business interruption coverage applies when governments order closures. A notable milestone occurred in Castellón, where a local court recognized a pizzeria’s right to 6,000 euros in damages, marking a breakthrough for policyholders who faced shutdowns during the state of alarm. This ruling centered on business interruption coverage within a commercial policy and illustrated how courts can interpret coverage in the absence of a direct physical loss.
In Pamplona, Lorca, and Granada, several courts have granted similar compensation to other affected firms, while a number of cases have been decided against insurers. The Valencian Community has also seen decisions that support claimants, indicating a broader trend toward recognizing pandemic-related losses. One court in Castellón, the 5th Circuit Court of First Instance, anticipated a claim filed by a hotel operator in the La Plana area and ordered Mapfre to pay 75,130 euros. A Madrid-based firm, Sánchez Butrón Lawyers, has filed more than 40 similar cases on behalf of clients from across Spain, underscoring a growing legal movement in this area of insurance disputes.
In the case brought by Vivas Rapalo SA, the operator of Jaime I hotels and the castle centre, the claim targeted Meliá’s chain and involved a demand for damages amounting to 118 million euros due to losses sustained during government lockdowns. The firm argued that a policy existed at the time the government declared a state of alarm and mandated the temporary closure of tourism businesses, seeking coverage described as all-risk hotel insurance with a business interruption component tailored to the specific circumstances of the case.
Respondents argued that the policy would only cover losses if the activity itself ceased due to an insured event, as tied to a physical damage incident and as defined in the general terms of the contract that exclude other scenarios of loss. The insurer asserted that the policy did not contemplate compensation for pandemic-related closures beyond those linked to property damage.
However, the Castellón court’s decision emphasized that the language describing the scope of business interruption was not merely an automatic exclusion but an autonomous, independent possibility of coverage. This suggested that the insureds could be entitled to compensation even when the closure did not arise from a conventional property damage event.
The magistrate also reminded that the general conditions of an insurance contract cannot be disadvantageous to the insured. These terms must be included in the offer conveyed to the insured by the insurer, and any limitation clause must be accepted in clear writing by the insured. In the present case, Mapfre could not demonstrate proper delivery and receipt of these general conditions, strengthening the insured’s position. The court noted that a limiting clause requires explicit acceptance by the insured and should be clearly communicated in the contract documents.
The Castellón decision affirmed that the insurer’s coverage could apply to forced closures during the state of alarm that lasted from March 19, 2020, to May 17, 2020, and ordered compensation based on the expert report detailing the hotel’s losses. The judgment highlighted that this period represented the initial government-approved lockdown and the immediate economic impact on hospitality businesses.
Claims organizations and law firms anticipate additional rulings in the coming weeks as more cases proceed through the courts after months of litigation. The Alicante-based firm, Sánchez Butrón Lawyers, frames these decisions as a potential lifeline for many businesses still grappling with revenue losses from the pandemic. Mapfre, for its part, declined to comment on the Castellón decision but indicated an intention to appeal the ruling, signaling that further legal developments are expected as courts continue to interpret policy language in the context of pandemic-related disruptions.
As more cases unfold, policyholders across Spain—especially those in the hospitality sector—will be watching whether these precedents translate into broader coverage for government-imposed closures. The evolving legal landscape suggests insurers and insureds alike will benefit from precise contract language and a clear understanding of how business interruption provisions interact with extraordinary events such as public health emergencies. Citations: Castellón Regional Court ruling, 5th Circuit Court of First Instance; case filings by Sánchez Butrón Lawyers; insurer Mapfre’s responses.