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Business interruption insurance test case begins

A court case lead by the Financial Conduct Authority (FCA) has begun this week to test the validity of business interruption (BI) coronavirus claims.

Taking place at The High Court, the test case will go on for eight days and is expected to “provide clarity and certainty for everyone involved in these business interruption disputes, policy holder and insurer alike”.

Many hospitality businesses believe they are due payouts from their insurance companies to cover damages caused by the coronavirus pandemic. However, insurers claim that the policies were never intended for losses caused by unprecedented measures such as government-imposed lockdowns.

The FCA has selected 17 examples from business interruption polices used by 16 insurers, eight of which are taking part in the court case. These include Arch Insurance, Argenta, Ecclesiastical, Hiscox, MS Amlin, QBE, RSA Group and Zurich.

The FCA comments: “The issues surrounding BI policies are complex and have the potential to create ongoing uncertainty for both customers and firms. The variation in the types of cover provided and wordings used mean it can be difficult to determine whether customers have cover and can make a valid claim. There are genuine doubts over the appropriate interpretation of the wording in some cases. This has led to uncertainty and disputes, with many customers who believe they have valid claims having these rejected by their insurer.

“We believe the circumstances of the current coronavirus emergency, and its effect on businesses holding BI policies means this uncertainty needs to be resolved as quickly as possible.”

The result of the test case will be legally binding on the insurers that are parties to the test case, but it could go on to affect up to 370,000 policy holders.

The trial can be viewed lived across 20th-23rd July and 27th-30th July by clicking here.

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