The UK Supreme Court has today, Friday 15 January, handed down its decision, finding in favour of small firms receiving payments from business interruption insurance policies says commercial property agent Prop-Search.
Many small businesses, from restaurants and bars to hairdressers and guesthouses, claimed they should have received payouts from their insurers after the coronavirus lockdowns left them unable to trade.
Many insurers however had declined to pay out, arguing that business interruption policies were not designed to cover a Government-imposed lockdown. This prompted the Financial Conduct Authority (FCA) to launch a test litigation case - the first of its kind in the UK - to provide clarity.
Samantha Jones, an Associate Director of Prop-Search, said: “In the lockdown of last Spring, many small businesses made claims through business interruption insurance policies for loss of earnings when they had to close. However, many insurers refused to pay, arguing only the most specialist policies had cover for such unprecedented restrictions
“Today’s ruling is undoubtedly an historic victory for the hundreds of thousands of small businesses that have been forced to close during the Covid-19 pandemic.”
It is thought the ruling will affect around 60 insurers and 370,000 policyholders, with payouts on insurance claims likely to be worth more than £1bn. The FCA said it would now be working with insurers to ensure they ‘move quickly’ to pay claims to businesses, some of which have been struggling to stay afloat.