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COVID-19 Business Interruption Insurance: Supreme Court update

20 Jan 2021

In September and April last year, I wrote about the challenges facing businesses where their insurers were refusing to pay out on their Business Interruption Insurance.

What has happened?
Since then the Financial Conduct Authority (FCA) has brought a test case against 8 Insurers seeking clarity from the Courts on whether Business Interruption Insurance policies responded to COVID-19 related losses. The test case considered 21 forms of policy wording which fell into 2 categories as follows:

  • Disease Clauses: which provide cover for business interruption arising from the occurrence of a notifiable disease within a specified radius of the insured premises.
  • Prevention of Access/Public Authority Clauses: which provide cover where there has been a prevention or hindrance of access to use of the premises because of the Government or Authority action or restrictions.

On 15 September 2020, the High Court handed down its judgment. It was appealed and the Supreme Court handed down its judgment on 15 January 2021.

The results of the test case
The decision of the Supreme Court can only be described as an emphatic win for policy holders.

It concluded that most but not all the Disease Clauses in the samples provided cover for losses resulting from the pandemic if at least one case occurred within the geographical radius of the clause.

It also found that certain Prevention of Access Clauses should be more widely interpreted than the High Court had found. The court did not rule on specific restrictions, mandatory guidance or general restrictions imposed, but considered the test should be one of “inability” to use premises for a discrete business activity rather than a “hinderance”. As such the wordings for claims under these clauses will need to be reviewed carefully.

The FCA estimate that 370,000 policyholders are likely to be affected by the outcome of the test case. Whilst the judgment is good news for many policyholders, this is not at all straightforward. Each policy will need to be considered in detail to work out what it means for that individual policy.



Policy holders with affected claims are expected to hear from their insurer quickly.

Opportunities do exist for insurers to continue to avoid cover, they are also likely to take a hard line when it comes to calculating losses.

How can we help
At Hay & Kilner we have experts with many years’ experience in dealing with Insurance Companies. We help businesses challenge insurance cover decisions.

We would happily review your policy to advise on whether you can now reasonably expect to obtain cover under your Business Interruption clause following the judgment from the Supreme Court. We can also assist in presenting your losses to insurers who are likely to scrutinise all claims carefully considering the number of claims.

If insurers continue to reject the claim, we can assist in submitting your claim to the Financial Ombudsman Service (“FOS”). FOS can only deal with claims made by small businesses and on claims up to £355,000 but it has the prospect of a quicker decision now that the FCA test case has been heard.

If you would like any further information or help please do not hesitate to contact Tom Whitfield at tom.whitfield@hay-kilner.co.ukwho will happily discuss this matter further with you. We are happy to have a short initial discussion free of charge.