COVID: business interruption insurance claims?

10th December 2021

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.


Other items in Arts & Entertainment
Whitings LLP
10th December 2022 Christmas ‘gifts’ from the taxman

Businesses may be hoping they can hold their annual Christmas parties this month. Providing the event is annual, open to all employees and the total cost, including VAT, is less than £150 per person (including non employee guest attendees), this will be a non-taxable benefit in kind (ie free of PAYE tax and National Insurance…

Ian Piper
4th November 2021 Super early retirement? – Not if under 47 now

The government is to increase the earliest age pension savers can access their pension pots from 55 to 57, wef 6 April 2028. Members of the firefighters, police and armed forces public service schemes will not be affected by this increase.

Chris Ridgeon
1st November 2021 Budget: Hospitality Sector

Well, mixed news in the Budget for our hospitality sector, I would say.   A cut in business rates by 50% for qualifying businesses in retail, hospitality, and the leisure sector for a further year will hopefully help with that large overhead. No extension of the temporary reduced rate of VAT beyond 1 April 2022…

Emily Haines
15th March 2021 SEISS for the newly self-employed in 2019/20

HMRC are writing to some individuals who started their sole trade/self-employment in 2019/20 and wish to claim the fourth and fifth self-employment income support scheme grant (SEISS). These individuals will be asked to complete some verification checks to confirm their identity and proof of their self-employment.   These individuals should receive a letter from 8th…

Mike Blackledge
26th November 2020 SEISS 3rd Grant– Guidance issued on how trading conditions affect eligibility

To be eligible to claim for the third Self-Employment Income Support Scheme (SEISS) grant you must either:   be trading and impacted by reduced demand due to coronavirus, or have been trading but are temporarily unable to do so due to coronavirus.   To help businesses understand whether they are eligible for the 3rd SEISS…