Covid Business Interruption Insurance Case

[LaurasOtherHalf]

Surprised this hasn't had more publicity but the insurance ombudsman had a case at the high court to establish why business interruption policy holders weren't allowed to claim on a policy they thought they had.

The judgement was published this week here;
https://www.fca.org.uk/news/press-releases/result-...

fca said:

Many policyholders whose businesses were affected by the Covid-19 pandemic suffered significant losses, resulting in large numbers of claims under business interruption (BI) policies.

Most SME policies are focused on property damage and only have basic cover for BI as a consequence of property damage. But some policies also cover for BI from other causes, in particular infectious or notifiable diseases (‘disease clauses’) and non-damage denial of access and public authority closures or restrictions (‘denial of access clauses’). In some cases, insurers have accepted liability under these policies. In other cases, insurers have disputed liability while policyholders considered that it existed, leading to widespread concern about the lack of clarity and certainty.

The FCA’s aim in bringing the test case was to urgently clarify key issues of contractual uncertainty for as many policyholders and insurers as possible. The FCA did this by selecting a representative sample of policy wordings issued by eight insurers. The FCA’s role was to put forward policyholders’ arguments to their best advantage in the public interest. 370,000 policyholders were identified as holding policies that may be affected by the outcome of the test case.

There is a summary from the legal team on the judgement here;
https://hsfnotes.com/insurance/2020/09/15/judgment...

fca said:

In order to establish liability under the representative sample of policy wordings, the FCA argued for policyholders that the ‘disease’ and/or ‘denial of access’ clauses in the representative sample of policy wordings provide cover in the circumstances of the Covid-19 pandemic, and that the trigger for cover caused policyholders’ losses.

The judgment says that most, but not all, of the disease clauses in the sample provide cover. It also says that certain denial of access clauses in the sample provide cover, but this depends on the detailed wording of the clause and how the business was affected by the Government response to the pandemic, including for example whether the business was subject to a mandatory closure order and whether the business was ordered to close completely.

The test case has also clarified that the Covid-19 pandemic and the Government and public response were a single cause of the covered loss, which is a key requirement for claims to be paid even if the policy provides cover.

So basically, if you were insured on a standard SME insurance bundle (which a huge amount of shops and small businesses are, see above) you may have cover.

Is no one else following this?

[Mr Overheads]

There is a thread on it, in this Business sub-forum, was last updated Tuesday:
https://www.pistonheads.com/gassing/topic.asp?h=0&...