A high court judgement relating to business interruption insurance in the wake of the COVID-19 pandemic, could prove to be a lifeline to thousands of small businesses in the UK. However, much uncertainty remains following the verdict and there is a possibility of further court proceedings.

Eight high profile insurance companies were taken to court in July, and the judgement found in September ruled that they must pay out to some, but not all, businesses, as a result of COVID causing them to shut during 2020. The Financial Conduct Authority intervened and brought the ruling after many small businesses were outraged by insurance companies claiming business interruption policies only covered local incidents and outbreaks.

Insurance firms ordered to pay out

An eight day trial ensued where insurance companies Arch, Argenta, Ecclesiastical Insurance, Hiscox, MS Amlin, QBE, Royal & Sun Alliance and Zurich argued their case, and although the resulting judgement could end up with claims topping £3billion, there is some disappointment amongst small businesses. This relates to a part of the ruling which states that, while policies which mention an outbreak of a disease will generally have to pay out, policies which only cover ‘prevention of access’ to business premises will not.

Around 400,000 businesses had claimed on their insurance, with many of them on the brink of collapse in the aftermath of and amidst the ongoing disruption caused by the pandemic. They may feel vindicated after insurers were ordered to pay out – and undoubtedly the court’s judgement is significant for the industry – but many experts predict the “devil will be in the detail” and it is expected that insurance companies will appeal the verdict in light of its nuanced outcome. The dissatisfaction on both sides suggests this is very much not the end of the matter and the case may end up in the Supreme Court.

Help with your business interruption claim

At Ison Harrison we have dealt with several small businesses affected in this way, particularly independent shops, retailers and the hospitality sector. Our head of corporate, Richard Coulthard, is an expert in corporate and commercial law, litigation and dispute resolution and he has sympathy for a number of small businesses caught up in this dispute.

Richard commented: “We can advise any client affected by this dispute over policy wording and who has already or would like to make a claim on their insurance for business interruption. Whilst there are some grey areas in this ruling, the verdict is there to be interpreted accordingly and we can help clients in understanding where they fit in and whether their insurers should pay out in accordance with the policy.”

Until any appeal is heard insurers should progress any claims as normal and pay out to those who are now entitled to it. Anyone who feels they fit into this category or would like advice on the ruling and how their insurance claims might be affected, should contact Richard and his team. We can offer constructive and reliable advice on your options and help you progress a claim based on the wording of your insurance policy.

Please call 0113 284 5000 or email Richard.Coulthard@isonharrison.co.uk for expert advice.