Coronavirus Lockdown and the FCA Business Interruption Test Case Ruling: What It Means for You

A recent court ruling could have an impact on business interruption claims on your policy

The High Court issued its judgement on Tuesday 15th September 2020 in an insurance test case advanced by the Financial Conduct Authority (FCA).

The FCA was looking for clarity on whether policyholders could make a claim for business interruption due to losses caused by lockdown on policies that included cover for:

  • Infectious or notifiable diseases (‘disease clauses’), and/or
  • Non-damage denial of access and public authority closures or restrictions (‘denial of access clauses’)

This is a complex judgement, stating that some disease clauses and certain denial of access clauses reviewed should provide cover, but not all of them and some insurers have already paid out on these clauses, while others have not.

Further information on the judgement and the background to the case is on the FCA website.

What this means for policyholders

Although the judgment will bring welcome news for some policyholders, each policy needs to be considered against the detailed judgment to work out what it means for that policy. There is also the possibility that insurers might appeal the decision.

Policyholders with affected claims can expect to hear from their insurer within 7 days of the judgement being made. If you have yet to register a claim and are now considering doing so, we will send you the appropriate form for completion.

Any policyholders who have complained to the Financial Ombudsman Service (FOS) who hold policies potentially affected by the judgement should await further information from the FOS.

Keeping you informed

As your insurance broker, we will continue to keep you informed of any further developments. We will work closely with insurers to understand how their policyholders are affected, so we can provide up-to-date information to all our clients.