Shorter Reads

Insurance test case rules some insurers should have paid out for losses caused by Coronavirus lockdown

Today’s insurance test case ruled that some insurers should have paid out for losses caused by Coronavirus lockdown, since ‘disease clauses’ in business interruption policies should have applied.

1 minute read

Published 15 September 2020

Authors

Share

Key information

Small businesses have been thrown a lifeline as a result of today’s insurance test case judgment, which ruled that some insurers should have paid out for losses caused by lockdown, since disease clauses in business interruption policies meant they were covered. Head of Banking litigation, Stephen Rosen, gives his initial thoughts on the judgment:

“This is a remarkable outcome for UK businesses, as the Court has ruled in favour of most arguments advanced by the FCA. That said, some categories of insureds will benefit more than others. Policyholders that are now most likely to now see their claims accepted are those which held cover for business interruptions caused by the occurrence of a notifiable disease within a particular area required under their policy (the so called “disease wordings”). Although more difficult, some businesses which were covered for prevention or hindrance of access will be also be able to claim. Those that were directly mandated to close (e.g. pubs and some restaurants) will certainly find it easier than those which were more generally affected by government advice to “stay at home”. It has been estimated that over 370,000 policyholders could be impacted by the Court’s ruling and insurers have been instructed to apply the judgment in reassessing all outstanding or previously rejected claims.”

“One issue that remains somewhat live is the question of how policyholders with “disease wordings” should be entitled to prove that COVID-19 was present in the area required by their policy. The Court was unable to officially sanction any particular methodology, so insurers will have to consider this issue on a case to case basis. That said,  insurers did at least concede that reported cases of the disease, or death statistics published by the NHS, could (in principle) be used to discharge the burden of proof on an insured. Policyholders could therefore seek to prove the presence of COVID-19 in their policy area if NHS data shows that a COVID-19 related death occurred at hospital situated within the area.”

The full judgment is available for download here: https://www.fca.org.uk/publication/corporate/bi-insurance-test-case-judgment.pdf

Related latest updates
PREV NEXT

Related content

Arrow Back to Insights

Shorter Reads

Insurance test case rules some insurers should have paid out for losses caused by Coronavirus lockdown

Today’s insurance test case ruled that some insurers should have paid out for losses caused by Coronavirus lockdown, since ‘disease clauses’ in business interruption policies should have applied.

Published 15 September 2020

Associated sectors / services

  • Commercial disputes
  • Banking & financial disputes

Authors

Small businesses have been thrown a lifeline as a result of today’s insurance test case judgment, which ruled that some insurers should have paid out for losses caused by lockdown, since disease clauses in business interruption policies meant they were covered. Head of Banking litigation, Stephen Rosen, gives his initial thoughts on the judgment:

“This is a remarkable outcome for UK businesses, as the Court has ruled in favour of most arguments advanced by the FCA. That said, some categories of insureds will benefit more than others. Policyholders that are now most likely to now see their claims accepted are those which held cover for business interruptions caused by the occurrence of a notifiable disease within a particular area required under their policy (the so called “disease wordings”). Although more difficult, some businesses which were covered for prevention or hindrance of access will be also be able to claim. Those that were directly mandated to close (e.g. pubs and some restaurants) will certainly find it easier than those which were more generally affected by government advice to “stay at home”. It has been estimated that over 370,000 policyholders could be impacted by the Court’s ruling and insurers have been instructed to apply the judgment in reassessing all outstanding or previously rejected claims.”

“One issue that remains somewhat live is the question of how policyholders with “disease wordings” should be entitled to prove that COVID-19 was present in the area required by their policy. The Court was unable to officially sanction any particular methodology, so insurers will have to consider this issue on a case to case basis. That said,  insurers did at least concede that reported cases of the disease, or death statistics published by the NHS, could (in principle) be used to discharge the burden of proof on an insured. Policyholders could therefore seek to prove the presence of COVID-19 in their policy area if NHS data shows that a COVID-19 related death occurred at hospital situated within the area.”

The full judgment is available for download here: https://www.fca.org.uk/publication/corporate/bi-insurance-test-case-judgment.pdf

Associated sectors / services

  • Commercial disputes
  • Banking & financial disputes

Authors

Need some more information? Make an enquiry below.

    Subscribe

    Please add your details and your areas of interest below

    Specialist sectors:

    Legal services:

    Other information:

    Jurisdictions of interest to you (other than UK):



    Article contributor

    Enjoy reading our articles? why not subscribe to notifications so you’ll never miss one?

    Subscribe to our articles

    Message us on WhatsApp (calling not available)

    Please note that Collyer Bristow provides this service during office hours for general information and enquiries only and that no legal or other professional advice will be provided over the WhatsApp platform. Please also note that if you choose to use this platform your personal data is likely to be processed outside the UK and EEA, including in the US. Appropriate legal or other professional opinion should be taken before taking or omitting to take any action in respect of any specific problem. Collyer Bristow LLP accepts no liability for any loss or damage which may arise from reliance on information provided. All information will be deleted immediately upon completion of a conversation.

    I accept Close

    Close
    Scroll up

    Find out about Business

    Find out about Dispute Resolution

    Find out about Individuals & Families

    Find out about Real Estate

    We are Collyer Bristow - The law firm for those that
    value individuality, creativity and collaboration.

    Legal & Pricing info Regulatory InformationAccessibilitySitemapPricing and service information

    Read our latest article: Family Court Statistics – A True Reflection?

    Read our latest article: Data Governance Act (DGA): Regulation (EU) 2022/868

    Read our latest article: Ensuring confidentiality of sensitive data in the workplace

    Read our latest news: Collyer Bristow advises Moulton Goodies on the sale of He-Man Dual Controls

    Read our latest news: Write your next chapter | apply for your Training Contract with Collyer Bristow

    ExpandNeed some help?Toggle

    < Back to menu

    I have an issue and need your help

    Scroll to see our A-Z list of expertise

    Get in touch

    Get in touch using our form below.



      Business Close
      Private Wealth Close
      Hot Topics Close