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18 January 2021 | Comment | Article by Richard Locke

Small businesses entitled to insurance pay-outs for loss caused by Covid-19 pandemic

The first national lockdown of March 2020 caused an incredible financial strain on businesses throughout England and Wales. Despite this, a significant number of small businesses were turned down by insurers for business interruption policy claims, with many insurers arguing that such policies were simply not designed to cover government-enforced lockdowns and unspecified global pandemics.

The Supreme Court has today (Friday 15 January 2021) ruled that small businesses should receive insurance pay-outs for loss of earnings caused by the first national Covid-19 lockdown. Today’s decision represents the final step in the appeal process and, following the landmark ruling, insurance companies are now being urged to pay out without delay on wrongly disputed claims.

The test case was initially brought by the Financial Conduct Authority (FCA) after it had received a significant number of complaints from small businesses. The court was asked to rule on the parameters for eligible business interruption claims. Eight leading insurance companies agreed to take part in the proceedings, with six of the eight insurance companies (Arch Insurance, Argenta, Hiscox, MS Amlin, QBE and RSA) appealing the matter to the Supreme Court. It is believed that this decision will affect many more insurance providers who sell similar products to the eight involved in the proceedings.

This decision could act as a lifeline to small businesses which were left unable to trade during the national lockdown. The FCA previously estimated that hundreds of thousands of businesses may be affected by the outcome of this ruling.

Whether a business can make a claim under its business interruption policy for any loss suffered as a result of the Covid-19 lockdown will ultimately depend on the specific wording of the policy.

If your business has suffered loss as a result of the Coronavirus crisis and you are concerned that your insurance provider has wrongly refused your business interruption claim, we would strongly suggest that you seek legal advice on your position.

Our dispute resolution team is ready to help and advise on how this ruling may assist your business. If you need advice on your position, then please do not hesitate to contact us.

Author bio

Richard Locke


Richard is a Partner and an elected partner on the firm’s board of management.  He is also Group Head of the ever expanding dispute resolution team at Hugh James. He conducts major commercial disputes frequently with an international flavour including commercial claims, mining disputes, shareholder and partnership disputes, professional negligence claims, contentious IT disputes, injunctive relief and insolvency.

Disclaimer: The information on the Hugh James website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. If you would like to ensure the commentary reflects current legislation, case law or best practice, please contact the blog author.


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