Supreme Court Ruling – Business Interruption Insurance

Posted by Liz Seyi on February 4th, 2021

On Friday 15 January 2021 the UK Supreme Court ruled in favour of SMEs in the FCA Test Case in its decision on whether certain Business Interruption clauses should respond or not to Covid-19 losses.

Small businesses that have had no choice but to close during lockdown could potentially be able to claim on their business interruption insurance following this ruling.

Although this decision will be welcomed by many SMEs that have been affected by the government-imposed lockdowns, the answers on whether the majority of business owners will receive payouts aren’t as clear-cut as they might seem at first glance (contrary to the press articles).

This judgement is binding on the specific insurers involved in the test case, and provides guidance for all other insurance companies. A payout from your insurer will ultimately depend upon how the policy wording is written in your cover. Critically, this will be specific to each and every insurer, with different outcomes depending on your own situation and what type of cover you originally requested.

It may also be the case that you have taken an extension in your BI policy that will pay for loss of income caused by human disease. The presence (and inner limits) of this specified extension, and crucially, the wording, will of course also have a direct effect on the potential of your claim.

So what happens if your BI claim has been rejected? In this case, we would advise your very first move should be to speak with your insurance adviser. They can then make contact with your business interruption insurance company to look at their previous decision once more, and whether the Supreme Court ruling has had an effect on this.

If you’d like more information, or further guidance on your next steps, TS Partners can help. Our team will continue to support all our clients to achieve the best possible outcome from their policy, and make the process as efficient as possible. Please speak to our team for more information.