Over the last two weeks, the High Court has looked at 17 policy wordings from eight different insurers - Arch, Argenta, Ecclesiastical, MS Amlin, Hiscox, QBE, RSA and Zurich - to decide whether Covid-19 triggers a business interruption insurance pay out.
Based on other policies that the FCA has studied, the court’s rulings are expected to apply to nearly 50 insurers, who sold insurance to 370,000 customers – mostly small businesses.
The eight-day case is coming to an end today (30.07.2020), although the judgment isn’t expected until September at the earliest. The result will be legally binding on the insurers that are parties to the test case, but it will also provide persuasive guidance for the interpretation of similar policy wordings and claims.
If you haven’t claimed already, submit a claim as soon as possible, as this will be a condition of your policy. If you have already made a claim, you should have already been advised by your insurer whether your policy is potentially affected by the outcome of the test case, or if not, the reasons why it is not likely to be affected.
If your policy is potentially affected, then don’t just wait for the outcome of the test case to advance your claim. For example, you can continue to gather information in support of your claim, such as evidence of cases of Covid-19 on your premises.
If you have been told that your policy will likely not be affected, don’t assume this is necessarily the correct interpretation, as causation issues are likely to be relevant to all claims. In this scenario, it will be advisable to await the judgment before taking court action.
While it’s difficult to predict exactly how the test case will be decided, whichever way it goes, there are likely to be lengthy court appeals and challenges from insureds or insurers, as the judgment will have devastating consequences for the losing party. If the FCA lose, many SMEs may face going under. If the insurers lose, they could face massive costs as they will be liable to pay the claims made under the respective policies, as well as further costs relating to late payment of claims.
It is highly unlikely that the judgment will draw a line under business interruption claims relating to Covid-19 in any event. The test case has been designed to resolve as much uncertainty as possible, by providing clarity on general contractual uncertainties. But the judgment will not cover all possible disputes in this area, and most cases will be decided on their own facts. The judgment will not determine how much is payable under individual policies either, meaning these claims will be ongoing for some time to come.
We can help. Our dedicated business interruption insurance team has been helping hundreds of businesses in this situation, by reviewing their policies for free. You can send us yours via this short form. If we think you have a claim, we’ll pursue your insurer. If you win, you pay us a pre-agreed fee. If you lose, you don’t pay anything.