Coronavirus Blog Series:
Business Interruption Insurance
Published 15 September 2020
The High Court in England and Wales today ruled that business owners who held Business Interruption Insurance but were forced to close during Covid-19 will now receive payouts on insurance claims.
Many insurers had previously argued that the business interruption policies were not designed to cover a Government-imposed lockdown and had rejected insurance claims.
The Financial Conduct Authority (FCA) brought the test case to the High Court seeking clarity on business interruption policy clauses, based on a sample of 21 policies from eight different insurers. The High Court ruled on a representative sample of 17 policy wordings used by 16 insurers and found that most of the disease clauses used in the sample, do provide cover.
The FCA warned that although the judgment was welcome news for many policyholders, it did not say that insurers are liable across all of the 21 different types of policy wording in the representative sample considered by the court.
Around 370,000 firms are affected by the judgment and should hear from their insurer within the next week, according to the FCA. Subject to the limits of the policy, the compensation received should return businesses to the position they would have been in had the pandemic never happened.
The Disputes team at MKB Law have been consulted by a significant number of clients seeing advice on business interruption insurance arising from Covid-19.
If you have any queries or require assistance arising from these matters, please contact our Associate Director Jonathan Jackson.