The Supreme Court has now reached a judgement in the much anticipated Covid 19 business interruption case. The case was fast tracked to the Supreme Court following the original High Court decision, due to the urgency of the matter to the businesses affected. The Supreme Court returned its judgement on the 15th January 2021, which was expedited in an equally swift manner. You can see the full judgement by clicking here.
The press reports which appeared immediately following the judgement, may have been misinterpreted by many businesses as some have assumed that previous claims made and repudiated by insurers could somehow be revived and that payments were now possible. In fact this was not the case
It is very important to stress that most UK policies only provide non-damage disease cover following the occurrence of a disease from a list of “named (or specified) diseases” that are listed in the policy wording. These policies will not respond to the pandemic, as Covid 19 is a new disease that does not feature in any policy coverage. It is only wordings which cover unspecified “notifiable diseases” which may respond, subject to all other terms and conditions of the policy.
Whilst the Supreme Court has substantially allowed the Financial Conduct Authority’s (FCA) appeal on behalf of policyholders, the subject matter of the appeal was specific to certain points of law relating to insurance and in relation to the policy wordings of certain insurers including Arch, Argenta, Ecclesiastical, Hiscox, MS Amlin, QBE, RSA and Zurich. The judgement is unlikely to change the position of other insurers where they have already confirmed their position to policyholders as those wordings and approaches to dealing with their claims was not under scrutiny. A summary of the FCA view of the case can be found here.
As well as the eight insurers that were subject to the test case, there are a number of other insurers who provide some policies using very similar wordings to the policies in question, and they will be subject to the ruling of the courts.
The judgement will assist Policyholders with coverage under those Denial of Access and Hybrid clauses that the High Court found would respond to Covid-19 BI losses and they are now likely to have broader coverage in two important respects:
- Some policyholders whose coverage would not have been triggered at all under the ruling of the High Court will now be able to claim – in particular businesses that were only partially closed (for example a restaurant that was able to continue to offer takeaways services).
- Policyholders whose coverage would not have been triggered until the coming into force of legal Regulations on 21 or 26 March 2020 may now claim from an earlier date, if their business was affected by instructions issued by the Government.
Importantly, no policyholder with a valid claim will now have the value of their claim reduced by virtue of a downturn in business caused by the effects of Covid-19 prior to coverage being triggered, or by taking into account any Covid-19 related factors whatsoever in considering the benchmark performance of the business against which the losses should be measured.
As most policies did not cover pandemics and were never designed to do so, the majority of businesses do not and did not have any cover for this risk. Insurers who are affected and where the judgment affects claims already concluded and responses have already been provided or claims where settlement was suspended pending the outcome of the case will be subject to review and thus MOFS will contact you should there be any change to your own circumstances.