Business Interruption Insurance
Last weeks ruling in the Supreme Court has given many small businesses a glimmer of hope in the latest lockdown. The Supreme Court ruled in favour of those small businesses with business interruption insurance where the loss of earnings from the Covid lockdowns can be covered by these policies. This will mean that many insurers face the prospect of paying out millions for loss of earnings from the lockdown.
The ruling is from a test case from the Financial Conduct Authority with a handful of insurers taking part, however, the ripple effect will be felt by significantly more insurers that sold similar polices to small businesses. The thought behind the test case was to examine a number of different policies issued by a group of insurance companies. However, the consequences of the ruling are that many other different types of polices and policy holders will be claiming for losses.
In reality though, many small businesses with business interruption insurance had already made claims to their insurer to cover loss of earnings. The hope now is that those claims already in progress will have no barriers to payment and possibly even seeing interim payments.
If you have business interruption insurance and have already made a claim (that was previously rejected or is in progress) it would be best to follow up with insurer to understand what impact the latest ruling has on your policy and if a payment for loss of earnings can be made. If you haven’t made a claim and have business interruption insurance (or a similar type of policy), speak to your insurer provider make a claim. I still anticipate that many insurers will scrutinise the different policies and specific circumstances for each business to potentially find a way of not paying out, but I do hope that this ruling will severely discourage that. At the same time, business owners will have lost faith and trust with the insurance companies, where at a time when they faced their biggest challenges, insurers did not provide them with the support needed.
The impact of this ruling will mean many small businesses can survive the latest lockdown and the hope is that this will be a vital lifeline to ensure these businesses are open past the Covid crisis. However, there is the issue that once we’re past the Covid crisis many businesses will see the premiums on future policies increase significantly to cover the pay-outs made, which again will add to the distrust many businesses have with insurers.
If you have any further questions, please don't hesitate to get in touch with us today.