September 15, 2020
If, like many businesses, you have suffered severe disruption during the coronavirus lockdown, today could be a very important day for you. The High Court handed down its judgment this morning in the test case between the Financial Conduct Authority and various insurers and has clarified many issues in relation to when Business Interruption cover should pay out to policyholders.
The court has rejected the insurers’ interpretation of many (but not all) of the provisions that they were relying on to avoid claims by policyholders. It remains to be seen whether any appeal is lodged to try to overturn the decision but this is undoubtedly a good outcome for a very large number of policyholders who were prudent and purchased Business Interruption cover.
The very detailed (162 page!) judgment not only determines how to interpret the specific policies that were selected to be scrutinised by the court but also gives guidance as to the principles to be applied when interpreting the wording of other policies.
Whereas policyholders were probably questioning whether the Business Interruption cover they had purchased was worth the paper it was written on, they should now be revisiting those claims and pursuing them against insurers as vigorously as possible. While it is the case that the court has not given a blanket decision that all Business Interruption policies must now pay out, a substantial number of claims that insurers were previously looking to reject will now have to be accepted.
This judgment is not the end of the story – in some respects, it may only be the end of the beginning (and there is the possibility it is a false start if an appeal against the judgment succeeds). Each policyholder will still need to demonstrate to their insurer the impact that the coronavirus outbreak and the government’s lockdown in response to it have had on their business and there will be exclusions and policy limits to be applied in each case. These are complex matters on which professional advice from solicitors and accountants will be needed.
The key point is that this judgment puts many policyholders back in the game and provides a much needed source of hope that businesses will be able to get back on their feet sooner through compensation for the losses suffered over the last 6 months.
Please contact Andrew Farrell (0161 667 3686) if this issue affects you and you are looking to progress a claim for Business Interruption.