FCA’s COVID-19 Business Interruption Test Case is a Victory for Policyholders

The High Court has handed down its judgement in the Financial Conduct Authority (“FCA”)’s business interruption insurance test case. In a landmark decision, the Court found in favour of the policyholders on most of the key issues.

Dated: 16 September 2020 Author: Andrew Donaldson, Forensics Partner

Why the test case was brought

The test case was brought by the FCA to clarify the areas of uncertainty around claims under business interruption insurance policies for losses resulting from the Covid-19 pandemic and Government lockdown.

Could your business interruption insurance cover put you back in a position prior to Covid-19?

The Court ruled that payouts were largely triggered under clauses which covered “disease” and/or “denial of access” to business premises. The Court also ruled that the Covid-19 pandemic and the Government and public response were a single cause of the covered loss, which is a significant decision as it means businesses should be put back in the position they would have been in had Covid-19 never occurred.

The devil is in the detail

It is important to note though that the Court’s decision differs depending on the wording of the particular insurer. The Court considered 21 policy wordings and reached different conclusions on each. For example, it ruled in favour of the insurers, rather than the policyholders, in the case of policies from Zurich and Ecclesiastical Insurance.  Policyholders can expect to hear from their insurer within the next 7 days.

It is possible that insurers will launch an appeal against the ruling, and it is uncertain what will happen regarding Covid-19 claims if this occurs.

Take Action Now

If you require any assistance with your business interruption claims, Dains Forensic can help. Please contact Andrew Donaldson on 0121 200 7924 or email forensic@dains.com