Navigating the new normal

Supreme court rules small businesses can claim Covid losses on insurance


All content on this page is correct as of January 15, 2021

The one where the big insurance companies lose (again)…

Has your business lost income during the COVID-19 pandemic? Perhaps the government’s restrictions meant you had to close your premises to customers? If so, you probably dug out your business insurance policies. You may even have tried to claim. And your insurer probably told you you weren’t covered. Well, following a judgment in the Supreme Court on Friday 15 Jan, it may be time to get back in touch with them…

Following the initial shock of the first lockdown, thousands of businesses made claims under the “Business Interruption” sections of their policies. These sections are intended to protect against losses of income caused by an event that interrupts the policyholder’s ability to run their business. So it was fair to assume they would be covered.

When the Financial Conduct Authority (FCA) learned that, in fact, insurers were rejecting the majority of these claims, they decided to step in. They brought a test case in the High Court against multiple insurers on behalf of policyholders. The aim was to ask the Court to decide on the correct interpretation of a sample of 21 common business interruption policy wordings.

Given its importance, the case was rushed through the normal procedural hurdles. It was heard in June 2020 and judgment given in September 2020. The High Court came down conclusively in favour of policyholders. However, the insurers decided to appeal and that appeal was “leapfrogged” directly to the Supreme Court in November 2020.

And now the Supreme Court has again come down conclusively in favour of policyholders. While not every business will be able to rely on the Court’s decision, thousands will now be able challenge their insurer’s initial rejection of their claim. Or make a claim when they previously didn’t think they would be able to. From small charities whose income-generating activities have been devastated to large arts organisations whose audiences have had to stay away.

We have been supporting a number of clients in trying to get their insurers to pay out since the pandemic began. In what has been a difficult start to the new year for many of them, the Supreme Court’s decision has been a welcome piece of good news.


This information is necessarily of a general nature and doesn’t constitute legal advice. This is not a substitute for formal legal advice, given in the context of full information under an engagement with Bates Wells.

All content on this page is correct as of January 15, 2021.

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