High Court Finds In Favour of Business Interruption Policyholders in Test Case

High Court test case ruling on insurance company liability brings welcome news for hospitality operators impacted by Covid-19

Without delving too deeply into legal minutia that we don’t really understand and will probably get wrong, the High Court today handed down a ruling that many companies impacted by the coronavirus pandemic have been awaiting with bated breath.

Unsurprisingly, several insurance companies that provide business interruption insurance have refused to recognise claims made by companies that have lost business or been closed due to Covid-19, and the crux of their argument for this non-payment is that the wording of various clauses in their policies excludes coronavirus as a covered business interruption.

The test case, which was brought to the High Court by the Financial Conduct Authority (FCA), has concluded today with the issuance of a complex, 150-page judgement that largely finds in favour of policyholders. The ruling does not mean that all claims will immediately be paid, but it is an important step in moving the process along. To quote the FCA:

The test case has removed the need for policyholders to resolve many key issues of contractual uncertainty and causation individually with their insurers. It enabled them to benefit from the expert legal team assembled by the FCA, providing a comparatively quick and cost-effective solution to the legal uncertainty in the business interruption insurance market.

The defendant insurers in this test case may appeal the decision, but given the dire situation facing many business awaiting insurance claim payout, they have committed to doing so quickly by skipping the appeals court, and taking the case directly to the Supreme Court.

A full description of the test case ruling and next steps can be read on the Financial Conduct Authority website.