Supreme Court rules on COVID-19 business interruption claims

Jan 15 | 2021

Around 370,000 small businesses in the UK whose claims for compensation were rejected by their insurance companies following the coronavirus lockdown were thrown a lifeline today (15 January) following a ruling by the Supreme Court.

The Court has substantially allowed the Financial Conduct Authority’s (FCA) appeal on behalf of policyholders regarding the wording of Business Interruption insurance policies. This completes the legal process for impacted policies and means that many thousands of policyholders will now have their claims for coronavirus-related business interruption losses paid. 

Sheldon Mills, Executive Director, Consumers and Competition at the FCA said, “Coronavirus is causing substantial loss and distress to businesses and many are under immense financial strain to stay afloat. This test case involved complex legal issues. Our aim throughout this test case has been to get clarity for as wide a range of parties as possible, as quickly as possible, and today’s judgment decisively removes many of the roadblocks to claims by policyholders.”

“We will be working with insurers to ensure that they now move quickly to pay claims that the judgment says should be paid, making interim payments wherever possible. Insurers should also communicate directly and quickly with policyholders who have made claims affected by the judgment to explain next steps.”

The Supreme Court judgment is complex, running to 112 pages and deals with many issues.  The FCA’s legal team at Herbert Smith Freehills have published a bulletin on their website, which may be referred to for further details.