The Supreme Court has today handed down judgment in the coronavirus business interruption insurance test case brought by the FCA and, by dismissing the insurers’ appeals, has found in favour of thousands of small businesses across the UK.
Indeed, the judgment strengthens the position for policyholders as the Supreme Court has widened the interpretation of some of the cover wording in the prevention of access clauses. It has gone a bit further than the High Court did.
The issue of whether business interruption policies cover losses caused by the pandemic is one of the most controversial legal issues resulting from the coronavirus crisis. Today’s judgment has unanimously rejected the insurers’ appeals and found in favour of the many businesses whose claims have been refused by insurers particularly on the issue of the interpretation of disease, prevention of access and trends clauses. For policies with wording identical to those in the case (and similar policy wording) this decision now sets out how those business interruption insurance wordings should be interpreted and, most importantly, applied. For example, the Supreme Court says that a disease clause for “any occurrence of a notifiable disease within a radius of 25 miles of the Premises”, will now have to provide cover caused by any illness because of Covid-19 that occurs within that 25mile radius.
The decision on causation is going to make it harder for insurers to reject claims. The ruling on trend clauses also helps the policyholder maximise the pay-out.
Businesses affected by coronavirus who believe they have business interruption insurance coverage should now be revisiting their policies, assessing them against the Supreme Court’s judgment and looking to getting their insurers to pay out. If a business is yet to make a claim it’s essential to seek expert support in gathering together the right supporting evidence for aspects such as lost revenues, forecasted revenues and any expenses incurred. Paying close attention to information for the claims process from individual insurers is also vital to ensure the correct formatting and timings are followed, and to boost chances of claims going smoothly. Policyholders should carefully consider how the Supreme Court’s judgment applies to the wording of their individual policies.
Steven Skiba, legal director and commercial disputes specialist comments “The appeal ruling has landed firmly in favour of businesses. This final word from the Supreme Court means that businesses and insurers are no longer in the dark when it comes to handling business interruption claims related to the coronavirus pandemic.
As a result of the case being fast-tracked for an appeal in order to provide further clarity, many struggling businesses have still not received a pay-out. However, with the UK now in a third national lockdown, it’s likely that this decision will have come too late for some but for others now is the time to have another look at those policies and, if a claim exists, make contact with the insurers.”
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