Insurance payout hope for businesses during Covid-19

Advice from Usman Anwar at Pearson Solicitors and Financial Advisers (Advertisement feature)

MANY Saddleworth businesses have been affected by the coronavirus pandemic but expected that their insurance policies would provide relief and assistance when times were difficult. However, some are struggling to get them to pay up.

Now in a welcome development the High Court has ruled that losses arising from the Covid-19 pandemic are covered by certain business interruption insurance policies.

The test case brought by the Financial Conduct Authority (FCA) relates to the wording of a number of Business Interruption Insurance policies.

Covid-19 was identified and added to the Government’s list of notifiable diseases on March 5, 2020 and since then local business owners have been hoping insurance policies would help them out if they closed the business and profits were hit, but some insurance companies have been refusing to pay out.

“Whilst the wording of specific insurance policies will still have to be considered against the Court’s judgment it is now more likely that the arguments put forward by insurers for rejecting a claim may not be upheld,” said Usman Anwar, Commercial Litigation Solicitor.

The recent judgement in the High Court does give some relief to the many SMEs whose businesses have been affected by the pandemic and those who may have had to shut down for the duration. 

Insurers had argued that the policies were not meant to cover such a situation but the test case stated that policy clauses dealing with infectious or notifiable diseases, or non-damage denial of access and public authority closures or restrictions, provided cover for losses resulting from the pandemic. 

Twenty-one sample policy clauses from eight insurers were considered and the court concluded that most, but not all, of the disease clauses provided cover. 

“Specific insurance policies will still have to be considered against the judgement and the context of the business but it does seem that their arguments for not paying out are limited,” added Usman.

The policy wordings considered generally related to Disease, Prevention of Access/Public Authority Decision and other wordings and each one was individually challenged and refuted.

“Those pending claims should now be taken forward and businesses can expect to hear from their insurers soon,” Usman added.

“However, it is sometimes the case that disputes will still take place. In those cases, it is always advisable to contact a solicitor and we can consider the policy wording in your case and advise on how to pursue your claim if your insurers still refuse to pay out.”

It has been estimated that 370,000 policyholders could be affected by this case, although an appeal may be launched.

• For advice on Business insurance, Business Interruption Loans and Commercial Litigation call Usman on 0161 785 3500 or email usman.anwar@pearsonlegal.co.uk