The Supreme Court has today delivered its judgment in the Financial Conduct Authority’s (FCA)’s business interruption insurance test case. The appeal judgement will no doubt be welcome news for many policyholders across the UK who have been awaiting a decision on whether their business interruption insurance will cover them for Covid-related losses.
The judgement settles many questions, but it should be noted that most claims will have to be looked at on a case by case basis before any payments can be made. This is because the decision comes down to specific wordings and phrases within each insurer’s policy documentation.
The Court looked at a 21 sample policy wordings from eight insurance companies to determine if their ambiguous policy wordings did, or did not, provide cover. The answer in most instances was ‘yes’.
It is estimated that there are around 700 policy wordings, from 60 different insurance companies that could be relevant to this judgement, affecting around 370,000 businesses. Therefore, it could be some weeks before insurers and lawyers are able to comment in more detail on specific policy wordings and then on individual claims.
The Court, the Association of British Insurers (ABI) and the British Insurance Brokers Association (BIBA) have all urged insurance companies to study the results and make payments to eligible claimants without any undue delay.
The FCA have stated that insurers should also communicate directly and quickly with policyholders who have made claims affected by the judgment to explain next steps.
Rest assured that Adler Fairways will be keeping a close eye on the situation for any clients that may be affected, to make sure claims are paid as quickly as is reasonable.
It is worth noting that this Court judgement is only relevant to policies that have the type of ambiguous wordings that the Court investigated; many other business interruption policy wordings do not provide cover and this judgment will not change that.
Following the judgement, our claims team are now busy looking at the details with the hope that we may be able to secure payments for clients who are eligible. Please bear with us as we work hard on your behalf, reviewing each client’s case individually to determine if they are eligible before working with insurers to manage each claim through to resolution.
For more information or further advice, please contact us.