On 15 September 2020 the High Court handed down its judgment in the Financial Conduct Authority’s (FCA) business interruption test case.
Although the judgment did bring welcome news for many businesses, the judgment did not say that the eight defendant insurers are liable across all of the 21 different types of policy wording in the representative sample considered by the Court.
The relevant provisions in the policies fell into three categories:
- Disease wordings: provisions which provide cover for business interruption in consequence of or following or arising from the occurrence of a notifiable disease within a specified radius of the insured premises.
- Prevention of access / public authority wordings: provisions which provide cover where there has been a prevention or hindrance of access to or use of the premises as a consequence of government or other authority action or restrictions.
- Hybrid wordings: provisions which are engaged by restrictions imposed on the premises in relation to a notifiable disease.
The court substantially found in favour of the FCA arguments on key issues and provisions relating to category 1 and 3, but, not so in the case of category 2.
The test case was subject to a leapfrog appeal to the Supreme Court.
On 15 January 2021 the Supreme Court handed down its judgment on the issues on appeal from the High Court.
The FCA will now work with insurers so that they rapidly conclude their claims processes on claims that the Supreme Court has said should be paid, providing interim payments wherever possible.
Each policy needs to be considered against the detailed judgment to work out what it means for that policy and those with valid claims will hear from their insurer soon.
Should you have any questions once you have read the full press release then please do get in touch with your usual Pound Gates contact.