Covid-19 Business Interruption Insurance Update – Supreme Court Ruling

18 Jan 2021

Jeremy Lederman

On Friday 15 September 2021 the Supreme Court gave judgment on the claim brought by the Financial Conduct Authority (FCA) as regards numerous businesses’ business interruption insurance policies. This was as a result of the businesses having to close due to Government regulations and insurers declining to make payment or limiting what they were prepared to pay.

The Court dealt with the appeal from the High Court’s recent ruling. Because of the importance of the case it was agreed that the “leapfrog” procedure could be used without referring the matter to the Court of Appeal. 

The Court dealt with what were regarded as typical policies from selected insurers. 

The High Court had among other aspects decided in favour of insurance policyholders as regards so called “disease” clauses where a business suffered loss as a result of a notifiable disease within a set radius of the business premises. It also made some rulings in favour of insurers.

The insurers appealed against the High Court’s decision and the FCA appealed against the Court’s judgment on certain aspects.

In what has been hailed as a victory for businesses, the Supreme Court rejected the insurers’ appeal and allowed much of the FCA’s appeal.  In doing so the Supreme Court widened the possible areas of coverage under the disease clauses. It also ruled that cover may be available for partial as well as full closure of business premises. It further decided that claims should not be reduced because loss would have resulted from the pandemic regardless and that two further types of policies should provide cover.  

The decision has wider implications as regards insurance generally.

The next steps are that: –

  1. The Court and the parties’ lawyers will work on a series of Declarations so that going forward it is clearer what the exact position is the policies and in general.
  2. Insurers should now contact policyholders take account of the ruling.
  3. If a claim has not been made one should be without delay;   

The decision concerns certain insurers and specific wording. The above is only a brief guide to a complex area. Clients will need to check their policies and wording and if necessary, consult with a professional. 

We have advised clients on their business interruption insurance policies and following the Supreme Court’s judgment will be pleased to assist further.

For further assistance and information please contact Jeremy Lederman or your usual Harold Benjamin contact.