The reverberations of the Financial Conduct Authority's (FCA) test case brought to define once and for all whether the consequences arising from coronavirus pandemic could be deemed to trigger business interruptions clauses in commercial insurance policies will be with businesses and insurers for the foreseeable future. The Supreme Court's decision which was largely in favour of the policyholders was heralded as a significant win for businesses. In some quarters the decision is regarded as a warning to the insurance industry that the sometimes spurious hair-splitting reasons insurers give for invalidating a policy, allowing them to slide off the liability hook has to stop.
The FCA has made every effort to assist businesses within its regulatory brief by bringing the test case in the first place, without which it is highly likely that thousands of businesses would not have been considered by the insurance industry to have valid cases for a pay out against their business interruption clauses in their policies. The decision was followed out with explanatory information regarding the Supreme Court judgment and a Dear CEO letter sent out across the entire insurance industry setting out how the FCA believed the claims should be handled.
The FCA has continued to assist by providing further steps the latest of which are a "Frequently Asked Questions" page and a policy checker page. Both pages help to clarify the judgment and provide guidance on how to make a claim, disease clauses and guidance on what to claim for.
Currently, countless businesses are battling to survive and manage the restrictive lockdown measures in place to limit the spread of the coronavirus pandemic. The welcome news that the slowing infection rate may lead to the lifting of some of the measures, enabling some degree of business to be undertaken in the not too distant future is much appreciated. The sheer complexity and number of claims inevitably will mean that insurance payouts and restoration of normal dealings is highly likely to be a long way off.
The Supreme Court decision does not necessarily mean that the insurers will capitulate and payout on demand. The prospect of navigating through the 115 page judgment to establish whether your policy wording is the same or similar to one of the 21 policies that came under the eye of the Lordships of the Supreme Court enabling you to make a successful claim may be a daunting prospect.
Vincenzo Senatore, a partner, points out "there is still plenty of mileage for dispute. The wording generally used in insurance policies is not always aimed at clarity and often policyholders themselves are not the best people to interpret the technical text of their policy."
The FCA points out "The test case does not consider individual policyholders' claims on their specific facts. Each claim will need to be individually considered to determine whether the policy provides cover for the effects of coronavirus. Policyholders will need to check the extent of their cover including how long it covers them for (length of their indemnity period), and what losses are included – such as loss of profit, fixed costs, or increased costs of working."
The most economic way of dealing with a business interruption claim in the current climate may very well be to be guided and advised by an insurance lawyer. Giambrone's highly proficient insurance and litigation teams are well placed to assist. This will ensure that from the beginning you have a valid claim, the chances of rejection are reduced and in the event of an argument from the insurer your expert will win. It would be very disappointing, after the considerable effort that has gone into clearing a way for businesses to make claims reliant on their business interruption clauses, to fall at the last hurdle now that the Supreme Court has opened the door.
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