How you could claim business insurance due to Covid disruption

The Financial Conduct Authority (FCA) last year brought a test case, which could affect around 370,000 businesses, over the wording of business interruption insurance policies, which some insurers argued did not cover the Covid-19 pandemic.

The City watchdog previously said it was bringing the legal action following “widespread concern” over “the lack of clarity and certainty” for businesses seeking to cover substantial losses incurred by the pandemic and subsequent national lockdown.

In November, the UK’s highest court heard “leapfrog” appeals – which have bypassed the Court of Appeal – in a case which could have implications for hundreds of thousands of businesses affected by coronavirus.

Announcing the Supreme Court’s ruling on Friday, Lord Hamblen said: “The appeals of the Financial Conduct Authority (FCA) and the Hiscox Action Group are substantially allowed and the insurers’ appeals are dismissed.”

This means that firms could potentially claim on their business insurance for being unable to trade due to the coronavirus pandemic.

But how do businesses go about claiming this money back?

Graham Mead, partner at Ipswich-based Prettys Solicitors, said the case only affected a small group of policy holders directly, but it could signal a wider change among insurance companies.

Graham Mead, a partner in the commercial dispute resolutions team at Prettys (Image: Prettys)

"Most business interruption claims are focussed around damage to property," Mr Mead said. "This case deals with situations where business interruption insurance covers non damage claims.

"As such it has a narrower application and is involved in fewer policies.

"The guidance that the FCA issued was that insurers who were involved with this case were supposed to keep people they insure abreast of what was going on and deal with the claims.

"If you're involved you should hear from your insurer as it all goes forward."

But for those wanting to see if they could claim money back and were not originally involved in the case he said: "I think the nub of it would be to check your policy wording to see if it is the type of clause that is covered by the case."

Mr Mead advised people to search for guidance published by the FCA in the first instance.

He said: "If you're still unsure, contact your insurer or your broker, and make the point that you would like to claim.

"But then if you're not getting not getting any joy from the usual channels, then I think you can consult a lawyer or raise a complaint to the ombudsman or the FCA."