With the UK currently in the throes of its third national lockdown, businesses spanning a wide range of sectors are continuing to suffer losses due to forced closures and restrictions on trading.
When the pandemic was first declared, many business owners across the country were confused about where they stood when it came to claiming Business interruption Insurance [BII] to recover their lost revenues.
This was because policy wording was often open to interpretation, with insurers failing to state clearly whether businesses were covered for events like pandemics.
Though many insurers refused to pay out on BII policies, a recent Supreme Court ruling has provided some much-needed clarity on the subject, offering hope to businesses where previously there was very little.
Here’s what happened at the ruling and why it means you should check your own policy immediately.
The Supreme Court’s ruling
In late 2020, the Financial Conduct Authority [FCA] declared its intention to appeal a previous High Court ruling at the Supreme Court in order to seek legal clarity around the meaning and effect of selected BII policy wordings in the context of COVID-19 claims.
The court action sought to ensure that policy holders would be treated fairly by insurers and insurance intermediaries when bringing claims, and included a representative sample of policy wordings.
It was argued by the FCA that clauses such as ‘disease’ and/or ‘denial of access’ – in relation to business premises – provide cover in the circumstances of the coronavirus crisis, and as a result the Court ruled in favour of its case.
What it means for business owners
This ruling offers a lifeline to many business owners – particularly those operating in sectors most affected by the pandemic – and means that thousands of businesses should now be able to receive a pay-out from their BII policies.
Furthermore, the ruling will allow many businesses to claim BII for the current lockdown, which could make a significant improvement to finances as firms set their sights on the easing of restrictions and a return to normal operations in the near future.
It is worth bearing in mind, however, that the Supreme Court’s ruling does not offer your business a ‘free pass’ to make a claim via your insurer, and that your claim will still be considered against the specific wording of your policy to ascertain whether there is coverage entitlement.
In addition to this, you will still be required to provide evidence of the losses that you are claiming for.
Even if you are confident that you can successfully make a claim, it is advisable that you seek legal advice first, particularly because the position is especially complex and wording can differ so greatly.
Conclusion
The Supreme Court’s ruling in this case has truly been a landmark one; not only for business owners but in legal circles also, and not least because it is likely to inform future business interruption insurance cases.
It is also expected to have a wider impact on the insurance industry, as insurers may now need to review their position on previously rejected claims before acting to narrow policy wording so as to avoid any ambiguity going forward.
For business leaders though, the most important thing of all that the ruling represents is the opportunity to claim successfully on their BII and start rebuilding their business and preparing for better days ahead.
Michael Foote, Director of cost comparison site, Quote Goat.
