Updated Statement on Covid-19 Business Interruption (FCA Test Case)

09 Feb 2021

Since the Supreme Court decision on the 15th January 2021, many of you would have read a myriad of stories in the press regarding the outcome. Unfortunately, much of the reporting was inaccurate, making a difficult situation even more confusing.

Sadly, for most businesses in the UK, the decision handed down will not change the position on policy coverage which existed before the High Court case in September 2020, or the Supreme Court case mentioned above.

Earlier in the summer, at the start of this process, Christopher Woolard, Interim Chief Executive at the FCA said,

As stated in our Dear CEO letter of 15 April, our view remains that most SME insurance policies are focused on property damage (and only have basic cover for BI as a consequence of property damage) so, at least in the majority of cases, insurers are not obliged to pay out in relation to the coronavirus pandemic. This case is focused on the remainder of policies that could be argued to include cover.

Policyholders should not assume that simple inclusion of their policy wording in this case will mean their policies are responsive. We are seeking a judgment that will help policyholders and insurers have a much clearer view of which business interruption policies respond to the pandemic, and those that don’t. Therefore, the court may well decide a number of these policies respond to the pandemic and others do not.

The High Court and Supreme Court cases, judged on approximately 370,000 policies. Whilst this is a large number, it only represents approximately 6% of the total businesses in the UK.

TH March have provided guidance at the earliest opportunity to our clients on their policy coverage during the pandemic. We have also informed them on how the court cases have affected them.

If you have not yet heard from your insurance broker or insurer, then it will be sensible to contact them to update you regarding the position on the policy cover you have for business interruption losses as a result of the Coronavirus pandemic.

The FCA have also provided some additional information by way of a “Policy Checker” and FAQ’s to try and assist. 

Find out more

Source: TH March