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SADDLEWORTH businesses impacted by the coronavirus pandemic now have an insurance lifeline thanks to a recent Supreme Court decision which could see a surge in pay-outs and may keep some businesses afloat.
The Financial Conduct Authority brought the test case against big name insurers to seek clarity on the interpretation of business interruption (BI) insurance policies. It is thought up to 370,000 policyholders could be affected.
Many business insurance policies have a BI clause relating to an outbreak of an ‘infectious or notifiable disease’ or ‘denial of access’ to business premises following public authority action in an emergency.
In this case, BI policy was supposed to pay for any losses incurred by a business – but
insurance companies rejected these claims. They argued the policies did not cover government-imposed lockdowns or that coronavirus was not covered under a list of ‘infections diseases’.
Many local business have been unable to remain open during the lockdowns – but now some may have legal come back against their BI insurers thanks to the Supreme Court ruling.
“This is positive news for BI policyholders and those Saddleworth businesses impacted. Insurers have been held to account by the highest Court in England and Wales and now those insurers need to pay out, or face further legal action,” said Usman Anwar, Litigation Solicitor at Pearson Solicitors.
“When the insurance companies were not paying out because of technicalities it could have meant some buinesses shutting down or making staff redundant. Now they have a legal claim to an insurance pay out.”
In the recent case one of the Supreme Court judges, Lord Briggs, said the insurers lack of cover was “clearly contrary to the spirit and intent of the relevant provisions of the policies in issue”.
He added: “This was not, of course, a disease which anyone could have had specifically in mind when the policies in issue were written and marketed.
“But it is clear from the use of the definition of a ‘notifiable disease’ in most of the relevant clauses, and equivalent wording in the remainder, that Covid-19 [when it appeared] fell squarely within the types of disease for which all the relevant disease and hybrid clauses provided cover.”
The case was initially heard in the High Court against eight insurers, but six – Arch Insurance, Argenta, Hiscox, MS Amlin, QBE and RSA – appealed and the FCA further appealed against some aspects of the High Court ruling to the higher Supreme Court, who then found in favour of the policyholders.
The nature of a BI claim and calculating losses will continue to be complex and inevitably the insurers will challenge the losses claimed.
“All policyholders should now receive notification on the findings of the Supreme Court and then subsequent payments should be forthcoming,” added Usman.
“Those who have submitted claims can seek clarification on the status of their claim, others can begin the claim process but it is always useful to talk to your solicitor and seek further advice and clarification.”
• For advice on all aspects of insurance disputes call Usman Anwar on 0161 785 3500 or email email@example.com