Insurers to pay out for Covid-19 related business interruption losses

The Issues

Policyholders whose businesses were affected by the Covid-19 pandemic suffered significant losses, resulting in a large numbers of claims being brought under business interruption (BI) insurance policies.

Many of the policyholders are small and medium enterprises whose policies are focused on property damage and only have basic cover for BI as a consequence of property damage.   However, some policies also cover BI from other causes, in particular infectious or notifiable diseases ('disease clauses') and prevention of access and public authority closures or restrictions ('prevention of access clauses'). In some cases, insurers had accepted liability under these policies.  In other cases, insurers have disputed liability while policyholders considered that they had cover leading to widespread concern about the lack of clarity and certainty.

The High Court’s judgment last September resolved most of the key issues but as parties were unable to reach agreement, insurers and the FCA made 'leapfrog' appeals to the Supreme Court.