31st July 2020Business Interruption Insurance – why businesses should follow the High Court case closely

The covid-19 pandemic has resulted in unprecedented financial challenges for businesses across the UK. For those in the hospitality and leisure industry, many have had to close their doors, on the advice of government, for several months and counting.

The fate of many small businesses, particularly in the leisure industry, is now in the hands of the courts to decide, while the regulator (FCA) take on insurers at the High Court in a legal battle potentially worth billions of pounds.

Businesses which have Business Interruption Insurance, either as a standalone policy or as an add-on to other insurance policies, should take note and be keeping a keen eye on developments.

Commenting on the landmark case, Rafi Saville, forensic partner at HW Fisher said:

“This case could have a significant impact for businesses across the UK who have experienced loss of earnings as a direct result of the covid-19 pandemic. The ruling will have ramifications far beyond specific policies which are currently up for debate.

“Over 350,000 mostly small businesses have policies with wording like those currently being disputed. Businesses who think they could be impacted should be following this case closely. If a ruling is made in favour of businesses, there will be a lot of work to do to ensure accuracy when estimating loss of earnings – it is a complex process and businesses should start seeking advice from their legal advisers and accountants as early as possible.”

The fight with insurers explained

The Financial Conduct Authority (FCA) has taken eight insurers to court in a test case being heard at the High Court in London to determine whether 17 different policies should pay out to policyholders because of the covid-19 crisis.

The FCA is arguing that the pandemic and the government’s reaction to it should be treated as a single cause of lost income, and should trigger payments on insurance policies.

Over 350,000 mostly small businesses have policies with wording like those being disputed in the High Court. If the insurance companies lose, the bill could run into billions of pounds.


The eight-day case is due to conclude by the end of July, although lawyers do not expect a ruling until September at the earliest.


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