COVID & Business Interruption Insurance Claims

• Has your business and livelihood suffered during the COVID-19 pandemic?
• Have you tried to claim on your business interruption insurance, only to be refused a payment by your insurer?
• Would you like to claim on your business interruption insurance, but are unsure of the process

We can help you access the financial support your business needs now. We are solicitors who specialise in group actions against financial firms and insurers. We can interpret your policy, determine if you are covered and then guide you effortlessly through the claims process. As times are difficult right now, we do all on a No Win No Fee basis.

Business Interruption (“BI”) insurance is typically designed to cover your business for loss of income during periods when you cannot carry out business as usual due to an unexpected event. BI insurance is often included in or offered as an optional extra to business insurance packages, which combine some different policies under one premium. It can also be offered as an optional extra to buildings and contents insurance policies.

In an ideal world, the policy will put your business back in the same trading position it was in before the insured event occurred and will compensate your business for any shortfall in profits or damage and any increased costs incurred as a result of the insured event. Typical examples of the usual types of events covered by BI policies include damage to your premises caused by a fire, storm or flooding, or the breakdown of essential equipment.

Some BI policies also cover losses caused by other events. Of particular interest during the pandemic have been ‘Infectious or Notifiable Disease’ clauses and ‘Prevention of Access or Public Authority restriction’ clauses. COVID-19 is an entirely new type of event, and, for this reason, although in some cases, insurers accepted liability under these types of clauses, in other cases, many insurers disputed claims made by businesses under their BI policies.

For example, some insurers argued that the unprecedented national lockdown – and all of the associated loss and damage caused by the shutdown of our economy – was not an insurable event. Others issued blanket denials of cover and claimed that the strict policy wording meant cover would only be provided where there was a local occurrence of a notifiable disease, rather than the nationwide spread of COVID-19.

Earlier this month, an important Judgment by the High Court brought clarity to many of the disputed issues and will be welcome news to a large number of policyholders. The Judgment will also reassure businesses which had previously been refused cover by insurers when making claims under their BI policies.

The test case was brought by the Financial Conduct Authority (“FCA”) on behalf of policyholders. The FCA, with co-operation from eight of the UK’s main insurers who underwrite a large number of BI policies, chose examples of different policy wordings which covered the majority of issues that were in dispute between insurers and their policyholders.

The policy wordings chosen to be analysed by the Court were split into three broad categories:

• Infectious or Notifiable Disease wordings: These clauses are those which provide cover arising from the occurrence of a ‘notifiable disease’, sometimes within a specified radius of the business premises, or within the actual vicinity of the business premises.
• Prevention of Access/Public Authority wordings: These clauses are those which provide cover in circumstances where access to the business premises has been prevented, as a consequence of Government action.
• Hybrid wordings: These clauses are those which include provisions involving restrictions imposed on business premises in relation to a notifiable disease.

Different conclusions were reached in respect of each category of wordings, but the Court found in favour of the FCA on the majority of the key issues. The Judgment says that most, but not all, of the Disease clauses in the sample provide cover. It also says that certain denial of access clauses in the sample provide cover, but this depends on the detailed wording of the clause and how the business was affected by the Government response to the pandemic.

A specific BI policy now needs to be considered against the detailed Judgment, in order to work out what it means for that policy and whether a business is covered. Each claim will turn on its own facts.

Nevertheless, there are several encouraging findings in the Judgment for policyholders, particularly for those with policies which include Disease wordings. The FCA estimates that some 700 types of policies across 60 different insurers could potentially be affected by the Judgment. According to the BBC, the Judgment has the potential to affect 370,000 policyholders, mostly small businesses.

It is still possible that the Judgment will be appealed. On 2 October 2020, the High Court granted ‘leapfrog’ certificates for an appeal to the Supreme Court to the FCA and a number of the affected insurers.

In the meantime, any appeal does not prevent policyholders from bringing claims now and obtaining compensation before the outcome of any appeal is known. The FCA has issued a ‘Dear CEO’ letter reminding insurers of the responsibility to treat businesses fairly when dealing with claims.

The claim submitted to the insurer (or a complaint to the Ombudsman after a claim has been rejected) must be properly prepared. It should detail and demonstrate all consequential losses that have arisen and how those losses are covered by the policy wording. Our solicitors have many years’ experience in presenting such claims to insurers and the Ombudsman.

Contact us now to discuss your policy and to find out whether we can assist your business to bring a No Win, No Fee claim to recover your losses.

Please get in touch with us for free, non-obligation advice, and one of our Solicitors will call you back at a convenient time.