A judgement was given early this week on the Financial Conduct (FCA) test case brought on the back of insurers disputing claims made through business interruption insurance policies. The case, The Financial Conduct Authority v Arch and Others highlighted the strain put on small business whose financial woes were deepened having been told by their insurers that COVID-19 Global pandemic phenomenon was not included within policy clause wordings.
The FCA took a sample or policy wordings, identifying 700 types of policies across 60 different insurers and affecting around 370,00 policy holders.
In a 150-page judgment, the court found that most, but not all, of the disease clauses in the sample provide cover. It also ruled 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.
The test case has also clarified that the Covid-19 pandemic and the government and public response were a single cause of the covered loss, which is a key requirement for claims to be paid even if the policy provides cover.
Each policy needs to be considered against the detailed judgment to work out what it means for that policy.
In the advent of further local lockdown being put in place, businesses must continue to keep detailed records of their commercial dealings in a format that may assist in bringing future insurance claims.
The FCA was granted permission to appeal direct to the Supreme Court in order to get legal clarity on the interpretation of some important elements of the judgment and the appeal commenced on 16 November 2020, lasting four days. The Supreme Court has confirmed that they will provide the judgment as quickly as possible however we do not know whether this means it will appear before Christmas or in January 2021.
Should you be in doubt as to what your Insurance policy may or may not cover you should contact a member of the Dispute Resolution team at Backhouse Jones on 01254 828 300.