COVID: business interruption insurance claims?

Those businesses with comprehensive commercial insurance cover will possibly be covered for ‘business interruption’. This cover will typically include losses arising from events that close or severely disrupt operations. The COVID pandemic has already led to many claims under this.

The insurance industry (as you might expect?) has warned that few policies are likely to provide cover, even if the Government forced businesses to close. Over the past decade or so, insurers have redrafted policy wording to exclude diseases not explicitly named.

The Financial Conduct Authority (FCA) has also noted that very few policy-holders are likely to be covered. It sought a judgment on a set of specific policy wording from the High Court. The court delivered its judgment in September 2020, largely ruling in favour of policy-holders. In January 2021, after an appeal, the Supreme Court also found in favour of policy-holders. The insurers party to this test case were:

• Arch Insurance (UK) Ltd
• Argenta Syndicate Management Ltd
• Ecclesiastical Insurance Office Plc
• Hiscox Insurance Company Ltd
• MS Amlin Underwriting Ltd
• QBE UK Limited
• Royal & Sun Alliance Insurance Plc
• Zurich Insurance Plc

There are however continuing disputes about calculating pay-outs, notably on how to take account of government grant and furlough support offered during the pandemic.  However, at the time of writing, we are seeing some insurance companies accept liability for Covid under this cover and they appear to be dealing with the claims based on individual lockdown periods.

Related, but not related, some commentators have noted that the scale of claims could be similar to PPI mis-selling, such that the industry will not be able to cover them, which might, they argue, be a case where the State would need to intervene.

For those businesses that think they may be eligible to make a claim, there are a few useful online tools:

• FCA policy cover checker: click here.
• Insurance industry regulator set of procedural instructions: click here.

As with most claims, even if you are uncertain of eligibility or quantification, best advice is probably to lodge a claim before the claim period expires. This can initially be stood over; to be properly considered at a later date.