A lot of small business (and some big ones as well) were insured against interruption of their business and were entitled to make a claim for losses suffered as a consequence of the interruption. The usual claims were when a building caught fire, an office was burgled or where there was an issue with the computer data bases at the office.
Some insurance policies went a good bit further covering interruption where an owner was locked out of his premises or where there was an infectious disease in the area where the business was situated.
In March of 2020 many business owners were precluded from trading on account of the government instructing them to close their doors and to stay at home. Some owners reached for their policies attached to their business only to be told that the policies were not such as to cover the losses caused by the pandemic.
The Financial Conduct Authority (FCA) went to Court with several of the insurers to obtain a ruling as to whether policy definitions were such as to justify payments being made. Whilst the proceedings were brought with the policies of the various insurers involved in mind the judgment was of use as a guide to other insurers that may have issued policies.
The Court came down on the side of the FCA and suggested that some policies would oblige insurers to make payment subject to proof of loss. The Judgment was in September last year and perhaps not surprisingly the insurers appealed asking the Court to address six areas within that appeal. The FCA also appealed as to part of the Judgment as well. The Appeal Judgment was handed down today and runs into
The FCA wanted a clarification of “disease clauses”, the clarification of “prevention of access clauses”, the connection between the losses and the pandemic, the use and effect of trends clauses in policies ,The case of Orient Express Hotels Limited v Assicurazioni , and the extent to which the business would have lost out owing to the pandemic anyway regardless of whether the business was closed by the government advice.
The Court decided in favour of the FCA. The Court decided that the insurers could not argue that the policies only applied in relation to local infections with local lockdowns and that the insurers could not argue that the business closing was irrelevant in that on account of the pandemic the losses would have occurred anyway.
Any one that has had a letter from insurers saying that they can no longer claim should revisit the letter and seek advice on account of the decision.