Many organisations have been negatively impacted by the coronavirus pandemic, and subsequent government lockdowns. There has been disruption to what organisations can deliver and how it is done. Some organisations have suffered major financial losses or setbacks.

Understandably, organisations looked to their insurers for a solution, but many found that their insurance policies did not cover this eventuality.  This might have been because business interruption insurance wasn’t purchased, or was limited to its core purpose of putting policyholders back in the financial position they were in prior to a property damage claim. Most insurers offer extensions to a traditional business interruption policy, including what we refer to as ” non-damage business interruption” covers, such as denial of access, communicable diseases, etc.

Many policyholders hoped that these non-damage extensions would kick in and assist them, either for denial of access (due to the lockdown) or for the actions of a communicable disease (Covid-19).

Each insurer’s wording is slightly different, and while a small number of insurers’ policies were triggered, others were not. There was widespread confusion and dissatisfaction with this.

The FCA brought a test case to the High Court against a sample of insurers on behalf of policyholders in an attempt to gain clarity over how policies should respond. The result of the test case were released on 15th September 2020, although we still don’t know the full ramifications.  Insurers may appeal the decisions the High Court reached, and they will need time to review their response.

If you have registered a business interruption claim through us, whether it has been rejected or accepted, we should get an update from your insurer over the coming weeks as they review each claim to see if the court ruling might affect their decision on policy coverage.

Whilst many have hailed the result as a victory for policyholders, it isn’t as simple as that. Each policy wording is unique, and so decisions made by insurers will differ.

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