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Business owners – check your insurance policies following COVID-19 High Court Ruling

We strongly recommend that Business owners and operators should check their insurance policies following a COVID-19 High Court Ruling passed down on 15th September 2020. Our Director, Michael Woolaghan, has summarised the High Court Judgement but the full version can be accessed here.




The Coronavirus pandemic has resulted in significant loss of income and revenue to businesses across the UK following the issuing of advice and guidance around social distancing and working from home coupled with specific legal prohibitions on certain types of business remaining open during “lockdown” periods.

It was known that HM Government met with Insurers prior to the decisions being made and that there was an unexpressed expectation that Insurers would play their part in assisting those with cover to weather the storm. Unfortunately the reality is that, in the vast majority of cases, Insurers refused cover. This prompted the Financial Conduct Authority to commence proceedings in the High Court seeking declarations in relation to the extent of cover provided and the recoverability of losses sustained.

What was readily apparent was that there was a plethora of different policies on the market adopting different terms, levels of cover and exclusions. The FCA identified a range of policy wordings from a range of different insurers that presented the best representation of the wording of Policies available in the market place.

In a judgment running to 580 paragraphs and 162 pages handed down on the 15th September 2020 the High Court picked its way through the minefield.

It is an impossible task to summarise the findings of the COVID-19 insurance ruling made in relation to each type of policy. However there do appear to be points of general importance:

  1. The wording of the Policy including any exclusion is critically important. The extent of the cover is to be inferred from the wording and what that reveals about the intentions of the parties when the Policy was entered into.
  2. Some Policies were clearly only ever intended to cover local threats that have a direct impact upon total access to premises such as a bomb scare or significant public disorder and the pandemic is not covered as it was a national event.
  3. Other policies have wider application and the pandemic would be covered but proof of incidence of disease would be required. What proof is acceptable was, to some extent, left open.
  4. The category of business will be critical to determining loss of use in consequence of Government guidance/advice or Regulation. Only some businesses in some categories were actually required to close whereas others may have been closed as a result of decisions to allow staff to work from home.
  5. The wording of the Policy may limit recovery only to a period where specific Regulations with legal force were in place. Advice or guidance, even where societal expectation mandated a high level of compliance, may not be covered.
  6. The cover provided may only apply to total cessation of business rather than a reduction in revenue or turnover caused. Total cessation seems to properly relate to the closure of the business intended to be covered by the Policy so that a restaurant that closes but then decides to move into the provision of takeaway food may still be covered as the original business is no longer taking place. Hybrid businesses, for instance a mix of high street and online, may not be covered.

What is abundantly clear is that each claim is going to depend upon the particular wording of the Insurance clauses in the individual policy and the particular circumstances of the business.

If you believe that you have an Insurance Policy that may provide cover then you should seek professional legal advice as soon as possible. Please ensure that you have all of your Policy Documents available.

This information is published for information purposes only. Nothing contained within it is intended to represent an accurate statement of Law or applicable principles, or to constitute legal advice. No reliance should be placed upon it. Independent legal advice should be sought.

COVID-19 Insurance Ruling

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