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    22 January 2021

    Coronavirus and Business Insurance: what does the recent UK Supreme Court Judgment mean for policyholders.

    The recent Judgment handed down by the Supreme Court in the case of The Financial Conduct Authority v Arch and Others will be welcome news to small businesses in the UK. Many businesses have been affected by the Coronavirus pandemic and suffered financial losses as a result.  The Supreme Court ordered that insurers must make payments to Small and Medium Enterprises (SMEs) under business interruption policies.

    The case was brought by the Financial Conduct Authority (FCA) on behalf of SMEs based in the UK. The decision provides much needed clarity on the interpretation of business interruption clauses, such as Disease Clauses and prevention of access clauses and whether they provide cover for losses suffered as a result of the Coronavirus pandemic.

    The Supreme Court dismissed the insurers’ appeals and allowed the FCA’s appeals. The FCA’s argument was that the disease and prevention of access clauses covered the Coronavirus pandemic and therefore policy holders’ losses were covered.  The Supreme Court confirmed that most disease clauses will cover business interruption losses, resulting from the Coronavirus pandemic, providing there has been at least one case within the specified geographical area.  With regards to prevention to access clauses, these may also cover losses resulting from the pandemic depending on their wording.  The Supreme Court held that cover may be available whether there are partial closures of business premises, full closure and for mandatory closures which were not legally binding.

    Where a business has an insurance policy which includes a business interruption clause, they are entitled to claim for loss of income due to the coronavirus pandemic.  Whilst each policy must be considered on its own terms and in relation to the facts of each case, the Judgment does mean that many businesses who were made to close their premises during the UK lockdown, may now be able to make a valid claim to cover their financial losses and further successful pay-outs may be now higher.

    Steeles Law Litigation Solicitor, Damian Pitts comments ‘This is a welcome and extremely important result that provides much-needed clarity for businesses affected by Covid-19.  Hopefully, the insurers will now simply get down to the business of paying out on claims according to the Supreme Court’s decision and the UK’s business community can start to rebuild.

    If your businesses has been denied an indemnity under business interruption cover, our Disputes Litigation team can assist, please email the team using disputes@steeleslaw.co.uk or call 01603 598000.

    *The information provided in this article is designed to provide useful information on the subject, not to provide specific legal advice.

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