Until now, the general approach has been that a company cannot claim privilege against its own...
COVID-19 and insurance: can you recover your lockdown losses from your insurer?
On 15 January 2021, the Supreme Court handed down a high profile judgment which is likely to result in a significant number of insurance pay outs for small businesses. The result is a welcome start to the New Year for beleaguered businesses who have suffered business interruption losses as a result of the coronavirus lockdowns and who hold a business interruption insurance policy.
Some Interruption Insurance covers the costs of business interruption resulting from infectious diseases or from the prevention of access and public authority restrictions, such as the lockdowns to which we have all been subject.
In Spring 2020, the Government closed many small businesses on very short notice. Some of those businesses had Interruption Insurance and sought to claim their losses from their insurer. However, many insurers did not pay out and argued that their policies did not cover prevention of access to business or that coronavirus was not a disease within the scope of the relevant Interruption Insurance.
The Financial Conduct Authority brought a claim on behalf of policyholders in the High Court against a group of insurers to clarify the position under various standard policies. The insurers appealed the decision to the Supreme Court who again ruled in the FCA’s favour.
The judgment is a complex one and considers the proper interpretation of contracts of insurance. However, its practical effect is that insurers are likely to finally make significant pay outs to holders of Interruption Insurance.
The FCA estimates that 370,000 small businesses may be positively impacted by this decision. The decision is may also influence similar cases which are referred to the Financial Ombudsman by policyholders.
If your insurer is refusing to fully indemnify you or your business, we can help. Please contact our Dispute Resolution team on 01384 410410 or via our website: https://www.georgegreen.co.uk/site/our-services/litigation-dispute-resolution-solicitors/.