Business Interruption Insurance and Covid-19

COVID-19, and the associated restrictions, have had a significant impact on businesses throughout Coventry and Warwickshire. This impact has been felt most by small, local businesses. Following the lockdown, many business owners attempted to claim on business interruption insurance policies. These claims have, perhaps understandably, been resisted by insurers. The Financial Conduct Authority (FCA), as the regulatory body for the insurance industry, began High Court proceedings in June 2020 to determine whether insurers would be able to decline the claims based on the wordings of the policies. The High Court determined that some insurers should make payments for COVID-19 related closures.

On the 15^th of January 2021, following appeals by both the FCA and the insurers, the Supreme Court handed down its judgment. The Court rejected the arguments made by the insurance companies. At the same time, the Court allowed much of the FCA’s appeal, increasing the number of policyholders potentially able to claim.

This decision should help many struggling small businesses, particularly in the hospitality sector. The decision is also likely to come as a relief to commercial landlords. As well as tenants now having funds to pay any overdue rent that may have accrued, they will also be less likely to find themselves looking for new tenants once the lockdown eases.

Insurers have already reacted, with new policies clearly stating the extent to which losses arising from lockdown measures are covered. Despite this, some experts have predicted there could be billions of pounds at stake for the insurers. This will likely have an effect on business’ insurance premiums for years to come.

Field Overell LLP provide legal advice to businesses in Coventry, Leamington Spa and Warwickshire. If you need assistance with your business, contact us on 024 7622 9582 or 01926 422 101.