Good news! Landmark ruling for Business Interruption Insurance claims

When Coronavirus first hit and businesses were forced to close, the talk in the business networking groups we are part of, was concerning insurance. Some businesses had taken out Business Interruption insurance but the wording in the policies was ambiguous as of course, this situation we are in did not seem to be included in the conditions. And of course, insurance companies have a reputation for not paying out without a fight!

Many small businesses in the leisure, property and hospitality industries had to close or suffered losses that prompted them to make claims under their Business Interruption policies during 2020. However, thousands of policy holders were left empty-handed as most small business policies concentrated on property damage and not on unprecedented scenarios like a global pandemic.

So it was looking pretty glum. However, a Supreme Court ruling on 15th January may have changed the situation for many businesses with this type of insurance. The Financial Conduct Authority brought this test case to the court and won

The Supreme Court dismissed appeals from six insurers. Their ruling that insurance clauses offering cover for notifiable diseases extended to losses resulting from Covid-19 means small businesses forced to shut their doors during the first lockdown will now have their business interruption (BI) claims paid if their policy included the words ‘notifiable diseases’..

It’s interesting to note that the ‘case law’ which insurers have previously relied on, a judgement made in 2010 referred to as ‘Orient Express’, was also ruled by the Supreme Court as invalid – ie wrongly decided. So if anyone quotes this to you, you know you’re being fobbed off! And it might have implications for other insurance claims under the term ‘wide area damage’ in natural disasters which affect businesses such as floods and storms.

If you would like to read more detail about the case, here’s a link