Supreme Court hands down its judgment
On 15 January, the Supreme Court handed down its judgment on the FCA’s business interruption test case.
It remains the case that most SME business interruption (BI) policies are focused on property damage and only have basic cover for BI as a consequence of property damage, so are unlikely to pay out in relation to the COVID-19 pandemic and its effects.
Some policies contain ‘non-damage’ related extensions of cover for business interruption, such as infectious or notifiable diseases (disease clauses) and denial of access or public authority closure or restriction clauses (denial of access clauses). The FCA argued that some policy wordings with disease or denial of access clauses do provide cover.
Following the judgment, the FCA advised “The judgment says that most, but not all, of the disease clauses in the sample provide cover. It also says that certain denial of access clauses in the sample provide cover, but this depends on the detailed wording of the clause and how the business was affected by the Government response to the pandemic, including for example whether the business was subject to a mandatory closure order and whether the business was ordered to close completely.”
Clients who have made claims that are affected by the test case will be contacted by their insurer to discuss what the judgment means for their claim. The Association of British Insurers has stated that “All valid claims will be settled as soon as possible and in many cases, the process of settling claims has begun.”
It is important to note that the Supreme Court judgment does not mean cover will apply in every circumstance or under every policy.
Since 15 January, many insurers have posted policyholder updates in response to the Supreme Court judgment. We have indicated where an update has been provided since 15 January. This page was updated on 25 January and will be reviewed regularly, so do check back from time to time.
We are continuing work with insurers to get a resolution as quickly as possible. You can visit the FCA’s business interruption hub for more information here.
FCA Test Case updates since 15 January
Ageas Insurance Limited *Updated
Allianz Insurance Plc *Updated
Ansvar Insurance *Updated
Arch Insurance (UK) Limited *Updated
Aviva Insurance Limited *Updated
AXA Insurance UK Plc *Updated
Axa XL *Updated
Chubb European Group SE *Updated
Covéa Insurance plc *Updated
DTW 1991 *Updated
Ecclesiastical Insurance Office Plc *Updated
Folgate Insurance Company Limited *Updated
Gresham Underwriting Limited *Updated
HCC Insurance Services Ltd *Updated
Hiscox Insurance Company Limited *Updated
JRP Underwriting *Updated
Liberty Speciality Markets *Updated
Markel (UK) Ltd *Updated
Morton Michel Limited *Updated
MS Amlin *Updated
Nationwide Broker Services Limited *Updated
Pen Underwriting Limited *Updated
QBE UK Limited *Updated
Royal & Sun Alliance Insurance Plc *Updated
Touchstone Underwriting Ltd *Updated
Zurich Insurance PLC *Updated