Guides & Advice

A life line for many businesses in a landmark Supreme Court judgment

Published: 15th January 2021
Area: Litigation & Dispute Resolution

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.”

Contact us

For further information, please contact Steven Skiba or a member of the litigation team in your local office.

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

Our free legal helpline offers bespoke guidance on a range of subjects, from employment and general business matters through to director’s responsibilities, insolvency, restructuring, funding and disputes. We also have a team of experts on hand for any queries on family and private matters too. Available from 10am-12pm Monday to Friday, call 0800 689 4064.

How can we help?

Our expert lawyers are ready to help you with a wide range of legal services, use the search below or call us on: 0330 024 0333

SHMA® ON DEMAND

Listen to our SHMA® ON DEMAND content covering a broad range of topics to help support you and your business.

Agriculture: diversifying or leasing your land to create habitat banks

6 Jul

Peter Snodgrass, Partner & Head of Agriculture
Agriculture: diversifying or leasing your land to create habitat banks

We know that biodiversity net gains provide a significant opportunity for landowners to diversify […]

Teachers’ Pension Scheme – strategic issues independent schools need to think about

20 Jul

Esther Maxwell, Legal Director | Emma Glazzard, Solicitor
Teachers’ Pension Scheme – strategic issues independent schools need to think about

Webinar Teachers’ Pension Scheme – strategic issues independent schools need to think about In […]

Misconduct outside the workplace and business disrepute

8 Sep

Michael Hibbs, Partner
Misconduct outside the workplace and business disrepute

In this webinar, Mike Hibbs – Partner and Robin Gronbech - Solicitor in our […]

Preparing for business exit and beyond

24 Jun

Jody Webb, Partner
Preparing for business exit and beyond

When your business has been your life, how do you separate the emotional investment […]

Our Latest Thoughts

All the latest views and insights on current topics.

Spring 2022 Consumer Finance Update

17 Jun

For the individual

Spring 2022 Consumer Finance Update

Read article Right Arrow

Arron Banks Loses Libel Claim; In Public Interest for Defamatory Statements About Him to Be Published

14 Jun

Litigation & Dispute Resolution

Arron Banks Loses Libel Claim; In Public Interest for Defamatory Statements About Him to Be Published

Read article Right Arrow

No Quincecare Duty Owed to a Beneficial Owner of Funds – rules The Privy Council

26 May

Litigation & Dispute Resolution

No Quincecare Duty Owed to a Beneficial Owner of Funds – rules The Privy Council

Read article Right Arrow

We launch litigation funding with DBA option

23 May

Litigation & Dispute Resolution

We launch litigation funding with DBA option

Read article Right Arrow

A simple guide to the Quincecare duty in banking claims – What is it and how to bring a claim?

4 May

Litigation & Dispute Resolution

A simple guide to the Quincecare duty in banking claims – What is it and how to bring a claim?

Read article Right Arrow