The landmark judgment handed down on Tuesday 15 September by the High Court in respect to of the case brought by the Financial Conduct Authority (FCA) against eight insurers to establish the position regarding business interruption clauses was greeted with delight by the 370,000 policyholders that the FCA believes will be affected by the outcome of the test case. Thousands of small businesses will be able to claim under the terms of their business interruption clauses in their commercial insurance policies. However, the 162 page judgment was detailed and complex and the FCA has been quick to point out that "each policy needs to be considered against the judgment to work out what it means for that policy."
The insurance industry sector across the board have commented on the judgment anxious to draw attention to the fact that the judgment does not create liability across all of the 21 different types of policy wording considered. Lloyd's of London commented that it "welcomes the test case judgment for bringing coverage clarity and said it will "carefully consider" the implications for its customers as well as its impact on the Lloyd's market." Lloyds of London expects to pay out £5 billion in coronavirus related claims.
Businesses that believe that they entitled to make a business interruption claim may very well still face difficulties with their insurer. It is not a secret that insurers are adept at finding ways to avoid paying out against a policy. The Lawyers in Giambrone's insurance and reassurance team work closely with the corporate and commercial litigation team to assist clients to succeed when making claims. Nick McEwen, an associate in the corporate and commercial litigation team commented "the unprecedented situation across the globe that businesses find themselves in resulting from the coronavirus pandemic in some cases will be alleviated by High Court judgment. The insurers have not yet decided whether they will appeal, it would be wise to submit a claim under a business interruption clause sooner rather than later." He further commented, "it is strongly recommended that the wording of your policy is scrutinised by a lawyer with expertise in the insurance and reassurance sector to support the claim and ensure that your policy wording falls into the correct category, sending a clear message as to the validity of your claim."
The Association of British Insurers (ABI) said it is important to look ahead so that there is a solution in the event of another pandemic. Huw Evans the ABI Director-General stated "This is a complex judgment spanning 162 pages and 19 policy wordings and it will take a little time for those involved in the court case to understand what it means and consider any appeals. Individual insurers will be analysing the judgment, engaging with the regulator, taking account of the appeal process and keeping their customers informed in the period ahead." The chairman of the Federation of Small Businesses, Mike Cherry said "'This ruling marks a big step forward. It can only be celebrated as a partial victory, however, as it still leaves many with little certainty around whether they will receive pay-outs for policies that have cost them thousands." Many businesses took the responsible step of taking out a commercial insurance policy incorporating a business interruption clause to protect the business only to find that they face a fight to have the terms of the policy honoured and are exposed to the risk they sought to avoid.
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