Our Policyholder Disputes team are insurance coverage specialists. We lead the way in Covid-19 business interruption insurance litigation.

If you would like to get in touch with our Policyholder Disputes team to discuss your Covid-19 Business Interruption claim, you can do so through our Claims Portal.

What is business interruption insurance?

Business interruption insurance provides cover when a company is unable to trade normally due to unforeseen circumstances. Traditional examples would include damage to the premises as a result of flooding, fire or burglary.

Effects of the Covid-19 pandemic

During the global lockdowns imposed by governments as a result of the Covid-19 pandemic, businesses were unable to trade as normal. Many brought insurance claims on the grounds that unforeseen circumstances had restricted their activity entirely or partly. Most insurers refused to pay out, arguing that the terms of insurance did not cover government measures in response to a pandemic, leading to litigation.

Background

The UK government’s response to the Covid-19 pandemic included some of the most extreme restrictions to be placed on UK businesses in modern times. Despite various forms of government financial support, businesses in all sectors, but particularly in hospitality, events, and retail, suffered existential losses as a result of a total or partial inability to trade for extended periods in 2020 and 2021.

Following insurers’ refusal to pay claims submitted under relevant business interruption policies, the Financial Conduct Authority launched a test case against eight insurers, with a representative sample of 21 policy wordings included.

In January 2021, the Supreme Court established conclusively that a majority of the policy wordings under consideration as part of that FCA test case were indeed capable of responding to Covid-19 business interruption losses.

At the time of launching its legal action, the FCA estimated that around 370,000 policyholders were identified as holding policies that may be affected by the outcome of the test case. However, data published by the FCA in March 2023 shows that, over two years on from the conclusion of the test case, only 43,027 claims have been paid by insurers.

Why do so many claims remain unpaid?

Many policyholders may simply have written off their losses, and are unaware that they have a valid claim to pursue.

Others may have had claims declined for a number of reasons that were left untested by the FCA test case, including:

• Coverage of Loss of Rent for commercial landlords;
• Coverage of claims under ‘At the Premises’ Disease clauses;
• Coverage of claims under various forms of ‘Prevention of Access’ clause;
• Insurers’ liability to pay damages for additional losses flowing from late payment of claims.

Since March 2020, a series of further key test cases has clarified and extended the scope and application of business interruption cover.

As a result, many businesses who had previously been informed that they did not have cover may in fact have significant payments available to them under their insurance policies.

There are also many claims which remain unresolved in respect of the correct amount payable under the policy, with disagreements arising over the length of the applicable indemnity period, the correct application of savings and trends clauses, and aggregation of losses caused by multiple government restrictions and/or at multiple premises.

Policyholders should now revisit their insurance policies to see if they have cover for business interruption losses. We can assist you in considering the issues and the scope of cover that could be available under your policy.

Our expertise and experience

We are leading experts in all types of business interruption dispute. 

Head of Policyholder Disputes, Aaron Le Marquer, is a leading practitioner in the field and individuals from our team have taken the lead in many key test cases since the original FCA test case, including:

• Policyholders v China Taiping
• ​Stonegate v MS Amlin
• ​London International Exhibition Centre v RSA
• ​Liberty Retail Limited v Liberty Mutual
• ​Bath Racecourse & Others v Liberty Mutual

We have assisted businesses across sectors advance claims under a range of  ‘non damage’ business interruption clauses, including for example:

• Notifiable Disease
• ​Infectious Disease
• ​Prevention of Access (non damage)
• ​Non-Damage Denial of Access
• ​Action of Competent Authorities
• ​Loss of Attraction

Get in Touch

Subject to the terms of each insurance policy, it is expected that there are still many thousands of policyholders who are entitled to compensation for their business interruption losses from their insurers as a result of the pandemic.

If you would like to get in touch with our Policyholder Disputes team to discuss your claim, you can do so through our Claims Portal.

• Claims Portal