Recent Legal Wins in UK Business Interruption Claims
The COVID-19 pandemic led to widespread business closures and financial losses, prompting many companies to seek compensation through business interruption (BI) insurance. However, insurers often rejected these claims, arguing that their policies did not cover pandemic-related disruptions. Recent legal developments have changed this landscape, offering significant victories for businesses.
The FCA Test Case and Supreme Court Ruling
In response to widespread claim denials, the Financial Conduct Authority (FCA) initiated a test case in 2020 to clarify the legal standing of BI insurance. The UK Supreme Court's ruling in January 2021 favoured policyholders, affirming that many BI policies should cover pandemic-related losses. The court ruled that "disease clauses" and "prevention of access" clauses in policies applied to COVID-19 disruptions, opening the door for thousands of businesses to receive compensation.
Recent Legal Successes
Since the Supreme Court ruling, there have been several successful claims, especially from businesses in the hospitality and retail sectors. Many insurers have also opted to settle claims to avoid prolonged litigation. Group litigation cases have seen success, further reinforcing policyholders' rights.
Impact on Businesses and Insurers
These legal wins offer clarity for businesses regarding their insurance coverage and set a precedent for future non-damage claims. Insurers are now revising policy wordings to avoid similar disputes in the future. This case has highlighted the importance of clear policy terms and regulatory oversight in protecting business interests.
We are already assisting firms with Business Interruption claims with our solution, which gathers all necessary evidence, documentation, and signatures, allowing them to make informed decisions at the earliest stage.
If you’d like to talk more about how we are helping claims firms grow, please contact me.
Author: Sare Brownhill
Sare has worked in civil litigation for 24 years, in her career she has been both a litigator and latterly Head of Litigation. She is a qualified Legal Executive. She now dedicates her time to helping firms thrive within the constraints of CFAs, DBAs and fixed fees by using best in class automation to maximise claimant engagement and automate repetitive, costly work.
