The UK Supreme Court has ruled that Business Interruption (BI) insurance policyholders will have cover for their business interruption losses as a result of the Government’s response to Covid-19, and in particular the nationwide lockdown.
This final ruling on the appeal of the Financial Conduct Authority’s (FCA) business interruption case means that many businesses will now be able to make valid claims of their insurers.
Businesses initially sought to make claims under their BI policies for losses as a consequence of the impact of Covid-19, however some insurers disputed liability under these policies. Insurers denied cover under disease clauses on the basis that they referred to a specific locality and that the lockdown was a result of a nationwide disease outbreak.
The FCA fast-tracked a test case in the High Court against eight different insurers in order to provide clarity and certainty on the issue of how to interpret BI policies.
On the FCA’s appeal, the Supreme Court ruled in favour of the policy holders. More businesses, that were ordered to close during the first national lockdown, will now be able to make claims of their insurers and some pay-outs in respect of valid claims will be higher.
Each policy will still need to be considered on its own terms against the detailed judgement and the facts of each case.
Business owners should review their insurance policies for any potential business interruption cover and seek advice to clarify if they are able to make a valid claim as a result of the Supreme Court’s ruling.