Many businesses across the UK had to close because of the lockdown imposed by the Government in March, and when many looked to their insurers for cover they were told the policies were never meant to cover such unprecedented restrictions.
The Financial Conduct Authority (FCA) brought a test case, which could affect around 370,000 businesses, over the wording of business interruption insurance policies.
In a 150-page judgment, which was delivered remotely on Tuesday, Lord Justice Flaux and Mr Justice Butcher considered 21 lead insurance policies issued by eight separate insurers.
Different conclusions were reached on the many policies, but the court found in favour of the FCA on many of the key issues, finding that most of the disease clauses in the sample provided cover.
Policyholders with affected claims can expect to hear from their insurer within the next seven days – and the ruling could mean more businesses receive a payout.
For on the help available to small business owners and other self-employed people during the pandemic, see our Self-Employed & Small Limited Company Help guide.
Martin: ‘A win for small business – could it have wider implications?’
Martin Lewis, founder of MoneySavingExpert.com, said “This is far from a simple ruling – with 150 pages just to announce it – but overall it’s a win for small businesses, and the FCA. It means some insurers who weren’t paying out will have to.”
“A key question in the consumer arena is whether it could have wider implications for other types of insurance too? Many who have wedding insurance for example have faced very similar issues, with some insurers trying to work their way out of paying for pandemic claims.”
“The judgement itself was based on specific wording relating to business interruption insurance, so doesn’t on its own set a wider precedent – but similar wording may have been used on wedding insurance policies for the same issue.”
“Of course as that’s a consumer policy there is less need to push it to the courts. Instead if you believe your claim has wrongly been turned down you can take it to the Financial Ombusmen. And instinctively this case is likely to strengthen the case of consumers pushing for a payout on similar issues. Yet of course with a judgement of such complixity, no read across, will be rock solid.”