The Supreme Court has delivered its judgment in the Financial Conduct Authority’s business interruption insurance test case and it’s good news for many thousands of businesses. Finding largely in favour of the policyholders, the decision means insurance companies are now having to pay up on many claims made for losses brought about by the Coronavirus pandemic.
This will be a huge relief for many businesses dependent on this financial help to stay afloat. The ruling also brings welcome clarity to policy definitions and interpretation which should smooth the process for future claims.
A bit of background…
This has been a protracted process and is an issue that we anticipated at the beginning of the first lockdown. Back in March 2020, we highlighted the importance of examining your insurance policy to check your Business Interruption Insurance cover: Coronavirus Crisis: Will Your Business Interruption Insurance Pay Up? It turns out our concern was more than justified. With so many businesses suffering significant losses due to the restrictions imposed by the Coronavirus pandemic, the number of claims under business interruption policies soared. And this inevitably led to a swift and fairly brutal response from the insurance industry intent on self-preservation and damage limitation.
Even policyholders with ‘disease’ and ‘prevention of access’ clauses in their policies, found their claims rejected. Many insurers denied liability by adopting a very restrictive interpretation of the policy terms, quibbling about what constitutes an ‘insured peril’ and to what extent this caused business disruption. Naturally enough, many businesses felt that this reliance on semantic distinction was rather unfair and, in September of last year, the Financial Conduct Authority brought a case before the High Court. Though this case resolved many of the key issues, agreement was not reached and both parties made appeals to the Supreme Court.
The Supreme Court’s judgment completes this legal process and means that insurers have agreed to settle thousands of claims for Coronavirus-related business interruption losses.
What this means for you
This judgment impacts all businesses and whatever your situation, we would recommend that you review your insurance policy as a matter of urgency.
Perhaps you had a claim rejected, and haven’t yet received recompense or notification of it. You may even have a particular Business Interruption Insurance policy that wasn’t subject to the test case. In either instance, you may still be entitled to a pay-out or at least have a good argument of cover, so it’s definitely worth revisiting your policy details.
How can we help?
Though the recent judgment has undoubtedly provided clarity, at 112 pages long, it still represents a daunting read and you would be forgiven for wanting some more tailored guidance. You may even still find yourself in dispute with your insurers about the extent of your cover or your requirement to prove losses.
Whatever your reasons, if you would like any help examining your policy or reviewing your claim, please do get in touch. We can offer you practical and specific advice and give you recommendations as to how to protect your business going forward. We’re also happy to approach your broker or insurance company on your behalf if that is something you feel would be helpful.
We’re here to help you navigate these uncertain times so please do drop us a line or give us a call if you need advice.
