A top insurance lawyer is urging troubled companies to take caution over a landmark court judgment that has ruled insurers can’t walk away from pandemic losses.
The High Court of England and Wales has ruled that despite insurers arguing that coronavirus losses were outside their cover, the policies do mean that claims need to be to be paid. This is likely to mean that many businesses that held business interruption insurance and were forced to close due to the Coronavirus pandemic are entitled to be compensated by their insurers.
However, Susan Hopcraft, partner at law firm Wright Hassall, warned that the matter might not be closed for some affected businesses, and is urging company directors to check the small print of their business interruption policies.
The latest verdict comes after the Financial Conduct Authority lodged a test case with the High Court in June this year after swathes of policy holders who believed they were covered for the pandemic had their claims rejected by insurers.
The High Court was asked to carefully consider the wording of a cross section of 21 business interruption policies before delivering their verdict.
Susan said: “On the face of it this judgment is brilliant news, particularly for those with disease-type clauses.
“Insurers have tried to ignore the words in the policy, something they are usually not at all keen to do because that is often very favourable for them; to but in this situation they have been rightly held to the policies they wrote.
“Those businesses with a ‘denial of access’ clause for their commercial premises should look more closely at their policy’s wording and how the business was affected by the pandemic before ascertaining if they are covered.
“There could still yet be an appeal and each claim still needs to be assessed as to whether it meets the policy provisions, but I would hope that insurers, having given this a really good try with a team of 29 barristers alone, will now move on to settling policy holders’ claims without further delay, as a vast number of business’ futures rely on this compensation.
“Overall though, the idea from insurers that pandemic losses cannot be covered, despite the clear words in the policies, has been swept away – paving the way for a recovery for thousands of businesses out there.”
