For many small businesses forced to close or restrict their operations as a result of the Covid-19 lockdowns that began in March 2020 and are still continuing, the news that the Supreme Court has ruled that major insurance companies should allow claims for Covid related business loses was a welcome ray of light.
On Friday 15th January, the Supreme Court ruled in the test case brought by the FCA against major insurance companies. The case, which began in June 2020, related to the refusal, by six of the world’s largest insurers, to claims related to non-damage business interruption during UK lockdowns and led senior judges to scrutinise business insurance clauses covering disease, denial of access to premises, and hybrid clauses.
The Supreme Court ruling has the potential to impact on around 370,000 businesses and 60 insurers and could lead to billions of pounds worth of pay outs for policies that have similar wordings.
While the FCA has promised to work alongside insurers to ensure they settle claims quickly and has announced that interim payments will need to be paid where possible, there will still be some time to wait before their full guidance on claiming is published. The FCA are expected to publish Q&A documents for policy holders and will also publish a full list of policy wordings that will respond favourably to the Supreme Court ruling. This will allow more businesses to make claims. In the meantime, the focus is on adjusting and amending any existing claims and on ensuring that they are dealt with quickly.
For businesses that have had claims delayed there may also be the question of whether they can claim damages for late payment. Under the Enterprise Act 2016, policyholders can not only claim for the value of their losses but can also claim for damages in the event of an unreasonable delay in payment. Evidence of this could be taking loans, additional costs of business reorganisation, or the costs related to going into administration.
Whether a business is already in the process of making a claim or if it believes that it is eligible to make a claim and has so far been denied, Jarmans Solicitors are available to advise and represent you. Our team can assist in working through the terms and conditions of your business insurance, challenging insurance decisions, and advising on the legal aspects of business interruption. If you feel that your business may be affected, contact us to make an appointment with a member of our commercial law team.