Has your Insurer declined a claim due to Covid-19 lockdown?

Although many thousands of businesses have been declined claims against business insurance policies for losses incurred during the pandemic, there was some good news from the Courts last week.

The Financial Conduct Suthority (FCA) last week took a case against insurers to the High Court using a representative sample of policy wordings used by eight insurance companies. Aiming to remove the need for individual biusiness owners from having to take the matter up individually with their own insurance company, the court found that most, but not all, of the disease clauses in the sample provide cover. Furthermore the court also clarified that he government and public response to the Covid-19 pandemic were a ‘single cause of the covered loss’ which is a key requirement for claims to be paid.

Whilst satisfied with the ruling, the FCA cautioned that although the judgment will bring welcome news for many policyholders, it 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 seven days.

This judgement is undoubtedly a significant boost for the many businesses who have been declined payouts by their insurers and could be the difference between soem businesses surviving, or not; although it may already be too late in many cases. Although the insurers may appeal, this should not prevent businesses from reviewing their policies immediately to ascertain if their claims may now be covered.

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