New Supreme Court ruling on disputed Business Interruption Claims

Supreme Court ruling that insurers must pay out on disputed coronavirus Business Interruption claims worth at least £1.2bn.

This is the fast-tracked judgment on the test case brought by the Financial Conduct Authority with the support of eight insurance companies last summer.

Representative firms including pubs, cafes, wedding planners and beauty parlours and an action group argued they faced ruin when they were turned down by insurers for business interruption policy claims on losses caused by the first national lockdown.

Six insurers Hiscox, RSA, QBE, Argenta, Arch and MS Amlin, told the Supreme Court in their appeal that many business interruption policies did not cover widespread disruption.

Giving the court’s ruling, Lord Hamblen said the court accepted the arguments from representatives of policyholders and dismissed appeals from insurers against an earlier judgement finding in policyholders’ favour. The ruling covers issues such as disease clauses, whether business were denied access to the properties, and the timing of lost earnings.

As the FCA website states:

Each policy needs to be considered against the detailed judgment to work out what it means for that policy. Policyholders with affected claims can expect to hear from their insurer soon. Policyholders with questions should approach their broker, other advisers or insurer.  Policyholders who remain unhappy following their insurer’s assessment of their claim may be able to refer their claim to the Financial Ombudsman Service, whose role is to resolve individual disputes….The Supreme Court’s judgment will be distilled into a set of declarations. The FCA and Defendant insurers are working as quickly as possible with the Supreme Court to enable the Court to issue its declarations.  https://www.fca.org.uk/news/press-releases/supreme-court-judgment-business-interruption-insurance-test-case

However the ruling avoided the issue of how insurers should calculate losses business interruption losses for companies that have multiple premises, or whether government support should count as part of a business’s income.

Photo by Mahosadha Ong on Unsplash