Commercial disputes & Banking & financial disputes

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.


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:



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