Business interruption and Covid-19

The widespread disruption and closure of businesses caused by the Covid-19 pandemic and the subsequent national and local lockdowns has brought into sharp focus the question of available insurance cover for losses under business interruption (“BI”) insurance policies and the extent of that cover.

The FCA brought a test case in summer 2020, in the public interest, which asked the High Court to consider a sample of BI policy wordings and whether policyholders that were previously denied cover under their BI policies, could make claims for their losses arising from Covid-19 related disruption and closure.

The High Court subsequently found in favour of policyholders on the majority of the issues in September 2020 but also granted the parties permission to appeal aspects of the complex and lengthy judgment, with the appeal being “leapfrogged” to the Supreme Court.

The FCA are encouraging policyholders and insurers to settle outstanding claims pending the outcome of the appeal. Our Commercial Dispute Resolution team are currently busy advising clients in a number of different sectors impacted by business interruption, on a number of issues arising out of the test case. The team can help you consider your BI policy, assess when an insurance pay-out is triggered and ensure that any such pay-out adequately compensates your business or organisation.