Legal win for businesses on Covid-19 insurance pay-outs

The Supreme Court has substantially allowed an appeal on behalf of a group of small business policyholders, meaning that claims for coronavirus-related business interruption losses may now be paid.

Many policyholders whose businesses were affected by Covid-19 and who made claims on their insurance found providers disputed liability, notably where the claims focused on clauses covering infectious or notifiable diseases, and non-damage denial of access and public authority closures or restrictions (known as ‘denial of access clauses’).

The Supreme Court judgment, which runs to 112 pages has now provided the final ruling on several issues. Among them, it found that most of the ‘disease’ and ‘prevention of access’ clauses provide cover in the circumstances of the pandemic.

The Financial Conduct Authority will publish a set of Q&As for policyholders to assist them and their advisers in understanding the test case. The FCA will also publish a list of business interruption policy types that potentially respond to the pandemic based on data from insurers.

You should consult your insurance broker to determine if you have the relevant insurance cover and whether your circumstances might allow you to make a claim.

Useful links:

The Financial Conduct Authority v Arch Insurance (UK) Ltd and others

Summary of the judgment from FCA’s solicitors Herbert Smith Freehills