Guides & Advice

FCA test case ruling – welcome news for businesses

Published: 15th September 2020
Area: Litigation & Dispute Resolution
The High Court has today handed down the long awaited judgment in the coronavirus business interruption insurance test case brought by the FCA.

Whilst the judgment may be appealed by the insurers, it is a very positive outcome for most businesses.

The issue of whether business interruption policies cover losses caused by the pandemic was one of the most controversial legal issues resulting from the coronavirus crisis. Today’s decision has provided some welcomed clarification, particularly on the interpretation of policy wording (although you still have to look carefully at the policy wording for each policy before deciding whether a payment is due).

In summary, the High Court has today found that, of the test clauses that were examined, most provided cover for business interruption due to coronavirus and this ruling could potentially cost insurers billions of pounds.

One of the biggest takeaways from the case is that it has clarified that the Government’s response to the pandemic and the pandemic itself were a cause of the loss.

Businesses affected by coronavirus who believe they have business interruption insurance coverage and who have not received confirmation of cover to date from their insurers should be revisiting their policies, assessing them against the judgment and looking to getting their insurers to pay out, given today’s ruling.  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 then also carefully consider how the High Court’s judgment applies to the wording of their individual policies.

This landmark judgment will go some way towards relieving some of the significant financial pressure that many businesses are facing at the moment.  Many businesses have been forced to close or cease trading and this could be the lifeline needed to enable some of them to recover.  A lot rests on this judgment but with insurers expected to appeal the decision, it is looking like the issue is far from over.

Contact us

For further information on this judgment, specific advice on individual policies and how we can help you contact Steven Skiba or Tim Speed or another member of the litigation team in your local office.

Our guide to recovery and resilience helps to support businesses and individuals unlock their potential, navigate their way out of lockdown and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.

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.

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