Im sure there are many small business out there who will breath a sigh of relief after the test case and courts decision. Now some of the business interruption claims will be valid, however it all depends on the actual wording of the policy itself.
UK financial regulators took aim at insurers’ attempts to compare the coronavirus lockdown to government warnings on cigarettes and alcohol, telling a London court that businesses had no choice but to shut down during the pandemic.
The clash took place during the first day of a trial Monday where the Financial Conduct Authority has taken Europe’s largest insurers to court to establish whether they should pay out pandemic-related claims. Hiscox Ltd., RSA Insurance Group Plc, Zurich Isurance Group AG and five other companies will represent the industry at the eight-day trial. (source)
What The Solicitors Say
A recent High Court ruling provides some much-needed hope for businesses continuing to suffer from the impacts of Covid-19. However, whilst the ruling has provided some clarity, it does not guarantee compensation for policyholders. Covid Insurance clams.
What was the issue?
Most businesses hold some kind of business interruption insurance. For SME’s this may only cover things like damage to property which in turn prevents trading. But, many policies also include clauses that cover the business against non-damage related business interruption events. This often includes policy extensions covering outbreaks of infectious diseases within a set radius of the business premises, or against interruption caused by Government or Local Authority closures which restrict access to the trading premises. Policies will also often include caveats about how much insurers will pay-out when they consider there to be prevailing market trends that would have impacted profits independently of the event which led to the claim.
Until the recently, insurers have been largely split on whether they will pay out against these clauses. Regarding infectious disease policies, insurers have argued that they only apply where there are specific local outbreaks of a disease which are distinguishable from any wider outbreak. This would therefore mean that a global pandemic like Covid-19 would not be covered. Insurance claims covid.
What did the High Court rule?
On 15 September 2020, the High Court made a judgement on a test case brought by the Financial Conduct Authority (FCA) on behalf of policyholders. In its ruling, the court decided that in most (but crucially not all) cases, the policy wording of the relevant disease and restriction of access were applicable to the Covid-19 pandemic. This means that despite the arguments of insurers, policyholders with clauses regarding infectious disease or restriction of access due to Government measures could well be covered by their existing policies. Covid 19 insurance claims.
More specifically, agreeing with the position of the FCA, the court concluded that local outbreaks of Covid-19 formed ‘indivisible’ parts of the wider outbreak and therefore the majority of policy wordings do in fact cover policyholders. Crucially, the court decided that many of the policy wordings did not specify that cover was only provided for instances of disease that ONLY occurred within the policy area. This decision sets a very clear principle that disease clauses do cover wider pandemics with local outbreaks, rather than hyper-local instances of infectious disease only.
Court decisions on trends clauses will also have a critical impact of the pay-outs policyholders could receive. Insurers had contended that there should be a very narrow view of the insured ‘peril’ (insurance industry jargon for the event to which the insurance cover applies). In relation to disease clauses, this would have seen the definition of disease restricted to hyper-local outbreaks only. The court completely rejected this argument. Had the insurers’ view been accepted and only outbreaks that could be identified as completely local been included in the definition, insurance companies could then have used the effects of the wider national and global pandemic to establish the baseline market trend against which they calculate their pay-outs. It should be clear to everyone that the effects of the Covid-19 pandemic are exceptional and it would be incredibly unfair to reduce claims against any baseline which takes these effects into account.
This is definitely a victory for policyholders. Rulings on disease and trends clauses pave the way for more and fairer payouts. Business interruption insurance covid 19 claims
But, whilst the ruling provides some cause for celebration for policyholders, it is anything but a complete victory. The court specifically stopped short of saying that the eight defendant insurers were liable against all 21 versions of the policy wording reviewed.
The principle set regarding disease clauses was relatively clear, although still not encompassing of all policy wordings. However, determinations made about clauses covering prevention of access caused by government interventions were less clear.
With regards to these clauses, the court did draw a link between the location of the emergency and the relevant authority’s actions. For example, many policies included terminology like:
“emergency in the vicinity”,
“danger or disturbance in the vicinity”,
“injury in the vicinity” and
“incident within 1 mile/the Vicinity”
In these cases, the court determined that these clauses were only designed to provide cover for very specific local emergencies and therefore would not cover general nationwide Government action to prevent the spread of Covid-19.
Similarly, the ruling determined that each policy’s specific wording around prevention of access made a huge difference in whether these clauses were triggered. For example, where a business continued to operate during lockdown in some reduced capacity, BUT has a policy clause with wording which concerns ‘prevention’ of access rather than ‘hindrance’ of use, the clause may not come into effect.
There were a range of rulings made by the High Court regarding these clauses which were very specific to the individual wording of each policy. For that reason, whilst policyholders might have cause to be optimistic about their chances of receiving pay-outs against their disease clauses, prevention of access rulings are more problematic.
What should policy holders do?
Business owners should feel cautiously optimistic. The ruling definitely tips the legal balance in Covid-19 business interruption claim disputes in the favour of the policy holder in a number of ways. Policyholders should ask their solicitors to provide a detailed analysis of how this ruling impacts them, based on the exact wording of their policies. With this information in their arsenal, business owners should keep fighting. Start your business interruption claim.
2020 has thrown up more challenges than anyone could have imagined. The UK’s business owners should not have to face the ongoing challenges of the pandemic alone. Supporting the recovery of business in the UK is going to be a joint effort from business owners, government, insurance companies, suppliers, customers, and indeed, law firms. Here at Ashmans Solicitors, we are ready to help.
Make a COVID-19 claim Through Your Business Insurance Policy
The COVID-19 pandemic has left many UK businesses facing unprecedented challenges, including the furloughing or redundancy of staff and, in many cases, an irretrievable loss of livelihood and lifestyle.
Many business owners have found it hard to keep their businesses trading, having been told by the government that it was unsafe to stay open or even to re-open.
However, if your business has been adversely affected by the coronavirus pandemic (COVID-19), help is now at hand.
On 5th March 2020, the department of health and social care added COVID-19 to the list of notifiable diseases. By doing so, it is hoped that people would be assisted in the recovery of their losses from their insurance companies.
Claiming through your business insurance policy can help to ensure that your business can continue to survive into a better future and that your outlook is no longer uncertain.
Ashmans Solicitors can help your Business Interruption claim
The high Court has passed judgment on the FCA test case which looked into the extent that your business insurer needs to cover you and your interests when dealing with COVID-19 related claims. The Court examined how ‘denial of access’ and ‘notifiable diseases’ clauses are to be interpreted when considering the business insurance policies.
If you believe your business has been affected, or your business insurer has refused your claim, Ashmans Solicitors have years of experience in dealing with insurance companies and challenging their refusal to honour their obligations to their customers.
If you are eligible to claim for Business Interruption due to COVID-19, then Ashmans Solicitors will act on your behalf on a no win no fee basis.
Your free business insurance assessment
Before proceeding with your claim, Ashmans Solicitors will conduct a free assessment of your business insurance policy.
Your free assessment will include:
- A full review of your substantial and complex business insurance document.
- Each section of your business insurance document will be cross-referenced – a vital aide to your claim.
- A detailed look at whether any clauses or notice provisions are time-limited – as this could affect your claim.
- A comprehensive overview of whether the ‘right to recovery’ is only linked to property damage in your policy or the damages claimed can be considered more broadly(i.e. could this be linked to coronavirus, a notifiable disease?).
Get back to business with Ashmans Solicitors
If Ashmans Solicitors find that you are eligible to make a coronavirus Business Interruption insurance claim, then we will proceed to present your claim in such a way that your insurer will handle your claim quickly and with no fuss.
Current estimates suggest that up to 370,000 policyholders may have Business Interruption Insurance.
You will need to take steps nows so that claims against your insurance policy can be identified early.
Your Three-Step Process
- Submit the Ashmans Solicitors online enquiry form – together with a copy of your business insurance policy documents.
- If your insurance policy covers you for Business Interruption, Ashmans Solicitors will provide you with a free in-depth analysis on your policy, focusing and highlighting the type of coverage you have and the maximum amount you are eligible to claim.
- If Ashmans Solicitors find that you are eligible to make a claim, then we will work on your behalf on a No Win No Fee basis, progressing your claim in a speedy and efficient manner.
Businesses that have been affected by the COVID-19 lockdown include:
manufacturers and wholesalers, dental practices, opticians, physiotherapists and podiatrists’, estate agents, clothing outlets, all indoor and outdoor hospitality businesses including cafes, bars, pubs and restaurants; all non-essential retail premises; hotels, hostels, bed and breakfast accommodation, holiday apartments/homes, cottages or bungalows, campsites, caravan parks or boarding houses; hair salons and barbers, (inc. mobile hair businesses), spas, nail bars and salons and beauty salons, day-care nurseries, tanning booths and salons, massage parlours and tattoo parlours, body and skin piercing services; cinemas, theatres and concert halls, funfairs, theme parks, adventure parks and activities, swimming pools and water parks, gyms, sports courts and facilities, museums and galleries, bingo halls, outdoor skating rinks, amusement arcades and other entertainment centres, model villages, indoor and outdoor attractions at aquariums, zoos, safari parks, farms, wildlife centres (any place where animals are exhibited to the public as an attraction), indoor and outdoor areas of visitor attractions including: gardens, heritage sites, film studios and landmarks.
Frequently Asked Questions
Here are some answers to common questions we get about the Business Interruption claim case.
My business is not one of those asked to close by the government, but we closed anyway. Can I still make a claim?
Yes. these are very unusual circumstances. It was your decision to close your business to customers due to fear of the Pandemic, so that would be seen as entirely reasonable. The social distancing measures and 2-metre rule would have been very hard for some types of businesses to implement too. So, if you closed your business to protect your staff and customers, then you may have a valid claim.
Can I claim on my business insurance as well as receiving a government coronavirus grant?
Yes, the government grants are seen as immediate help for businesses. The government knows that business owners will also be making a claim against their insurance policies. You can proceed with your free assessment with Ashmans Solicitors.
I tried to claim by myself but there’s too much paperwork to get through – how is it better to have the help of a solicitor?
Ashmans Solicitors will pick through your Insurance Policy wording to the nth degree, and their expertise will come to the fore as they do so. Your claim needs to stand up as valid when it’s presented to the insurer and Ashmans will make sure that it is dealt with in a professional fashion.
My claim was denied unfairly – can you help me bring legal action against my insurers?
Yes –you have a solid case if you had tried to claim yourself and were denied. If you feel that your insurer has unfairly refused to pay out, then the Ashmans Solicitors will give you the option of bringing legal action against the insurer on a no-win, no-fee basis-if your policy has a valid Business Interruption clause.
The insurer might have to then reconsider their position and decide to pay the policy or the matter may proceed to court. In a court setting, a Judge will decide whether or not they have to pay (within the terms of your business insurance policy).
For this service, Ashmans Solicitors may take up to 25% of what you receive from your insurance company, however this will be subject to your individual circumstances and the actual fee may be more or less than the quoted percentage.
If I can’t find my insurance policy can I still make a claim through you?
Yes, you can still start the Assessment Process with Ashmans Solicitors, and also you will need to contact your insurance company and request copies of your policy: documents, schedule, certificate and booklet. They have to by law give these to you. When you receive these documents, all you need to do is email them over to us and we’ll start your free assessment.
Will I pay you any money if I lose my claim?
No – if the claim is not successful then you will not receive any money and you will not have to pay us anything either. Unless you have told us anything that was not true or misled us in any other way about your claim.
My business is not very big – can you still help me to make a claim?
Yes, it does not matter the size of your business at all, you can still have us make a claim for you. It is the wording of the Policy that makes all of the difference, not the business size. Once you have submitted your free assessment form online, we will contact you about taking the next steps to make a claim.
Do I have to pay Ashmans Solicitors upfront to make a claim?
No, we will not take an upfront payment from you –and you will only have to pay us if you win your claim. The payment that you make would come out of the money that we recover from your business insurer on your behalf. We operate under a no-win, no-fee basis. If you do not win your case then you do not have to pay anything to us – but this changes if you have told us something that is not true, or have in any way misled us about your claim. An example of this would be if you tell us that you had been adversely affected by the coronavirus lockdown and we discover that you were not adversely affected at all.
What should I pay you if I win my claim?
We hope that your claim will be successful. Ashmans Solicitors may take up to 25% of the money that you receive from your insurance company, however, this will be subject to your individual circumstances and the actual fee may be more or less than the quoted percentage.
I’m ready to make my claim – how do I start the process?
It’s a very easy three-step process. Once you have submitted your free assessment Form online, we will contact you about taking the next steps to make a claim.
Legal information by Ashmans Solicitors