Covid 19 - What you need to know - Court rules in favour of businesses in business interruption insurance dispute.

15 Sep

We have previously posted updates on the FCA's case against Insurers concerning business interruption (BI) claims arising from the present pandemic.

The FCA announced in May it intended to obtain a Court declaration to resolve contractual uncertainty in BI insurance cover.

Today, Tuesday 15th September, the FCA have published a news item confirming the Court found in favour of the arguments advanced for policyholders by the FCA on the majority of the key issues.

The FCA’s legal team at Herbert Smith Freehills have published a summary on their website, which may be referred to for further detail.

Although the judgment will be welcome news for many policyholders, the judgment did not say that the eight defendant insurers are liable across all of the 21 different types of policy wording in the representative sample considered by the Court. Each policy needs to be considered against the detailed judgment to work out what it means for that policy. Policyholders with affected claims can expect to hear from their insurer within the next 7 days, state the FCA.

In their statement the FCA stated:

The test case has removed the need for policyholders to resolve a number of the key issues 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 test case was not intended to encompass all possible disputes, but to resolve some key contractual uncertainties and ‘causation’ issues to provide clarity for policyholders and insurers. The judgment does not determine how much is payable under individual policies, but will provide much of the basis for doing so.

It is possible that the judgment will be appealed. Any appeal does not preclude policyholders seeking to settle their claims with their insurer before the outcome of any appeal is known.

Law correct at the date of publication.
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