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Turned down for a business interruption insurance pay-out? Your claim could still be successful

Businesses forced to close under lockdown rules, only to be told their business interruption insurance doesn’t cover them for a pandemic, should keep a close eye on an important test case.

Next month (September), a High Court judge will decide to what extent insurers need to cover Covid-19 related claims against their policies.

Seeking clarity

In a test case brought by the Financial Conduct Authority (FCA), the judge will look at a sample of 17 business interruption policies provided by companies including Hiscox, RSA Group, Arch Insurance and Argenta. All have agreed to take part voluntarily.

The decision could affect as many as 370,000 struggling firms which say they were wrongly denied cover for the virus and could go bust as a result.

Insurance companies, on the other hand, say most business policies simply don’t cover a pandemic.

The FCA, which brought the case after receiving 400 complaints, says it will provide ‘clarity and certainty for everyone involved in these business interruption disputes, policy holder and insurer alike.’

What should I do?

In particular, the FCA test case is examining how Denial of Access and Notifiable Disease extensions will be interpreted in relation to Covid-19 claims against insurance policies.

It’s important to act now, without delay, to determine whether you have business interruption insurance – either as a standalone policy or an add-on –  and to identify any potential claims you may be able to bring as quickly as possible.

Check now

  • Do your insurance policies provide cover for business interruption claims? If you’re not sure, speak to your insurance broker. If your business is part of a group, also check the group company’s insurance policy;
  • If you have business interruption cover and think you have a claim for losses suffered by your business, notify your insurer as soon as possible. This is important as many policies only give you a set amount of time to notify them of a claim.

Get in touch

For further advice on Business Interruption claims and related issues, please get in touch with Commercial Disputes Partner James Taylor at james.taylor@wards.uk.com or Solicitor Richard Darbinian at richard.darbinian@wards.uk.com.

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