From the outset, Freeths cast doubt on the media coverage that suggested that business interruption insurance would not provide cover for losses in relation to Covid-19. In our previous article here we urged operators to check their policies carefully.
High Court decision
In September, in the test case brought by the Financial Conduct Authority (FCA) acting on behalf of policyholders, the High Court ruled in favour of a number of the FCA’s arguments. We drafted a detailed article explaining the key parts of the judgment, which you can find here.
Supreme Court decision
The FCA and the insurers appealed against some of the rulings made by the High Court on certain policy wordings. The Supreme Court decision broadly decided in favour of the FCA and intervening campaign action groups including Hospitality Insurance Group Action.
This decision has potential consequences for thousands of pub, bar, restaurant and hotel operators many of whom may now be able to claim for their business interruption losses suffered as a result of the Government’s response to the pandemic. The FCA, which is the conduct regulator for insurers, wrote a letter to the insurance industry stating: “It is essential that insurers reassess and settle claims quickly in the light of the Supreme Court judgment”. Many insurers have already agreed to settle claims.
This was a test case involving 8 defendant insurers and looking at different 21 policy wordings. There are 100s of other policy wordings which could respond in a similar way but which weren’t specifically considered by the Court. You will need to contact your advisers for advice on your individual policy.
Commercial Landlords
The decision also gives hope to landlords in the sector who are looking to bring claims for unpaid rent. Landlords are advised to look at their non-damage business interruption insurance clauses and to take advice on the specific wording of each policy.
Specific policy wording
Your policy wording may be affected by the Supreme Court’s decision however, you will need to take specific advice in the light of this complex decision and the way that the UK Government’s advice and Regulations affected your business.
Contact Freeths insurance specialists Adam Edwards or Daniel Meyer for further assistance.
