Business Interruption Insurance Test Case Reaches Supreme Court

The Supreme Court, the highest court in England and Wales, is this week hearing an appeal in respect of the FCA’s business interruption insurance test case. The case was first heard by the High Court in July, when the FCA brought the test case in the interests of policyholders.

Many businesses were forced to close during the Covid-19 lockdown, and some found themselves in major financial difficulties. Businesses therefore relied upon their business interruption insurance to compensate them. However, many insurers refused to pay out, arguing that the policy wordings were not designed to respond to the circumstances that arose during, and in consequence of, the Covid-19 pandemic.

The High Court looked at 21 policy types from eight insurers. In its ruling, delivered in September, the High Court generally rule in favour of policyholders in that most, but not all, business interruption policies should pay out.

Insurers are appealing the court’s decision in respect of 11 of the policy types, whereas the FCA is appealing the decision in two instances where the High Court had ruled the policies should not pay out.

The appeal is being heard at the Supreme Court this week and a final ruling should be provided within a few weeks. The judgement will be the authoritative guidance for these policies and similar ones not examined within the case.

If the High Court’s judgement is upheld, the FCA will expect insurers to respond promptly.

About the author

Nathan joined RWA in 2016 on successfully completing his PhD. He previously worked in the private, public and charitable sectors. Nathan leads the content and professional standards team at RWA and is responsible for managing and curating technical content on the Aviva Development Zone and the award-winning My Development Zone e-learning platforms.

Since joining RWA, Nathan has written hundreds of business skills e-learning modules and assessments on a variety of subjects, including leadership and management, communication skills, human resources, employability, regeneration, citizenship and equalities.

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