Coronavirus lockdown continues to cause loss and damage to UK businesses, some of which have made claims on their business interruption insurance policies. Most such claims so far have resulted in an immediate rejection by the insurers.
The Financial Conduct Authority (FCA) started to take an interest in these rejections a few months ago, instructing lawyers Herbert Smith Freehills to bring a test case in the High Court to seek clarification of what 21 different sets of common wording in leading insurers’ policies actually meant, and whether pandemic-related claims were valid or not.
On 15 September the High Court handed down its judgment. If you hold a business interruption policy, you’ll be very pleased to hear that the judges decided that very many policyholders could, in the judges’ opinion, make valid claims that the insurers would have to pay.
Because there are so many different sets of words used by different insurers in their various different policies, the High Court ruling inevitably is very complex, and the insurance companies have appealed the judgment. However, as matters currently stand, many thousands of policyholders would be well advised to make claims now on their policies.
If you have such a policy, you first need to see what category of wording is included. The test case split the policies into three different kinds of wording:
- Disease wordings
- Prevention of access / public authority wordings
- Hybrid wordings
Policies with disease wordings were found by the judges to be most clear-cut: many policies with such wordings were found in the judges’ opinion to give rise to valid insurance claims. The other wordings were generally less favourable, but some were still valid.
We recommend that you check your business insurance policies to see if you have any business interruption cover. If you do have such cover, we would be happy to discuss how you might make a claim. Please get in touch with your usual BKL contact or use our enquiry form.
You can also find more information and guidance at our coronavirus hub.
The full commentary from Herbert Smith Freehills is available here.