Lawrence Stephens

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Supreme Court Backs Pay-Out of COVID Business Interruption Claims

January 2021

The Supreme Court has ruled that thousands of UK businesses are entitled to have claims paid for business interruption losses caused by COVID-19.

In September 2000, the High Court ruled that, subject to the limitations of their own policies, businesses with business interruption insurance would be entitled to claim for financial losses sustained as a consequence of the Coronavirus pandemic.

The FCA had brought the test case on behalf of policyholders.

Both the FCA and insurers had appealed certain aspects of the High Court decision and, due to the importance of the issues raised, the appeals were ‘leapfrogged’ directly to the Supreme Court.

Last week’s decision means that many businesses will now be able to recover their losses from insurers.

In a press release from the FCA, Sheldon Mills, Executive Director of Consumers and Competition at the FCA, commented:

“Coronavirus is causing substantial loss and distress to businesses and many are under immense financial strain to stay afloat. This test case involved complex legal issues. Our aim throughout this test case has been to get clarity for as wide a range of parties as possible, as quickly as possible, and today’s judgment decisively removes many of the roadblocks to claims by policyholders.”

The FCA has also stated that it is now working with insurers to fulfil payments to policyholders as soon as possible, and has instructed insurers to make contact with affected policyholders immediately.

This successful outcome for the FCA has thrown a lifeline to struggling businesses across the UK, who can now expect to receive payments for their business interruption claims from their insurance providers in the near future.