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Legal News | 22.01.21

COVID-19 LEGAL UPDATE: FCA BUSINESS INTERRUPTION INSURANCE TEST CASE

Who We Are

As you may already be aware, on 15 January 2021 the Supreme Court delivered its judgment in the Financial Conduct Authority’s business interruption insurance test case; allowing the FCA’s appeal on behalf of policyholders.

Background

A large number of claims have been made under Business Interruption (BI) policies in the past year, as a result of many businesses suffering significant losses due to the Coronavirus pandemic. There has been substantial variation in whether insurers have accepted or disputed liability under these policies, which led to calls for the FCA to urgently clarify this issue.

The Judgment

On appeal by the FCA, the Supreme Court ruled that:

  1. Cover may be available for partial closure of premises, in addition to full closure, and for mandatory closure orders that were not legally binding; and
  2. Valid claims should not be reduced because the loss would have resulted in any event from the pandemic.

What does this mean for policyholders?

This judgment will mean that more policyholders will have valid claims and some insurance pay-outs will be higher. This has also removed the need for policyholders to resolve many key issues individually with their insurers.

What are the next steps?

The judgment will now be condensed into a set of declarations, and further guidance to support policyholders is set to be published by the FCA after 22 January 2021, including a list of BI policy types affected.

Our advice is, if you have suffered losses due to business interruption as a result of the Coronavirus pandemic, check your cover and contact your broker. If you need legal assistance, please contact us.

If you would like more advice about how this judgment affects your business, please get in touch with your usual contact or email oliver.price@wansbroughs.com.

 

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