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The COVID-19 outbreak along with the public health controls put in place by the Government led to substantial loss to businesses.
If your business has suffered losses as a result of the pandemic you may be able to make a claim on your business interruption (“BI”) policy following the High Court ruling in, The Financial Conduct Authority (FCA) v Arch Insurance (UK) Ltd & Ors  EWHC 2448 (Comm) (“the Test Case”). Our claims experts can provide comprehensive and thorough guidance in connection with recovering your losses if your claim has initially been refused by your insurer.
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Many policyholders whose businesses were affected by the Coronavirus pandemic suffered significant losses, resulting in large numbers of claims under business interruption (BI) policies.
Most SME policies are focused on property damage and only have basic cover for BI as a consequence of property damage. But some policies also cover BI from other causes, in particular infectious or notifiable diseases (‘disease clauses’) and prevention of access and public authority closures or restrictions (‘prevention of access clauses’). In some cases, insurers have accepted liability under these policies. In other cases, insurers have disputed liability while policyholders considered that they had cover leading to widespread concern about the lack of clarity and certainty.
The FCA’s aim in bringing the test case was to urgently clarify key issues of contractual uncertainty for as many policyholders and insurers as possible. The FCA did this by selecting a representative sample of 21 types of policy issued by eight insurers. The FCA’s role was to put forward policyholders’ arguments to their best advantage in the public interest. 370,000 policyholders were identified as holding 700 types of policies issued by 60 insurers that may be affected by the outcome of the test case.
The High Court’s judgment last September resolved most of the key issues but, because we were unable to reach agreement, insurers and the FCA made ‘leapfrog’ appeals to the Supreme Court (without going to the Court of Appeal first).
FCA Test Case
By way of background, last year the Financial Conduct Authority (FCA) brought a test case (FCA v Arch Insurance ( UK ) Ltd and Others) in order to clarify the interpretation of a number of common business interruption insurance policy wordings which were giving rise to disputes as to whether claims made following the outbreak of COVID-19 in the UK were covered. The High Court decision was handed down last September, but both the FCA and most (six of eight) of the insurers involved then appealed straight to the Supreme Court.
The Supreme Court has dismissed the insurers’ appeals, and substantially allowed the FCA’s appeal.