The High Court is expected to make a ruling this month as to whether most business interruption insurance policies covered policyholders across the coronavirus lockdown period.
There is a lot at stake in the case, which was brought to the High Court by the Financial Conduct Authority, as a favourable ruling could see around 37,000 policyholders receive a combined total of up to £18 billion in business interruption insurance claim payouts at an average of between £30,000 £50,000 per policy.
Any judgement made by Lord Justice Flaux will be legally binding and will form “persuasive guidance” for insurers with similar policies, not simply the eight being looked at — Arch, Argenta, Ecclesiastical, MS Amlin, Hiscox, QBE, RSA and Zurich.
Unfortunately, even if the High Court does rule in favour of policyholders, there is unlikely to be clarity any time soon; legal experts predict that whatever the ruling, the case will be appealed.
The origins of the business interruption insurance court action can be traced to May during the early stages of the coronavirus lockdown. Several thousand business insurance policyholders faced the frustration of their business interruption claims being turned down by insurers who said that their policies did not apply during a global health pandemic.
The FCA decided to intervene, citing concerns that the usual process, a declaratory judgment, would not provide adequate resolution.
Health, fitness and leisure businesses are among those that have been most affected by the coronavirus pandemic, with many believing that they have valid business interruption insurance claims only to be told otherwise by their business insurer.
However, those who have been dissuaded from making a claim because of the uncertainty, should act quickly. Many policies state the policyholder must make a claim as quickly as possible or otherwise risk lose the ability to make one in the future.
If you are in the leisure, tourism, food, fitness or retail industry and would like to tailor a policy to your specific business insurance needs – Tredstone can help you ensure that you get the best quality cover at a competitive price. We can also advise you on all your optional cover needs so that you are properly protected in all eventualities.