The High Court has handed down its judgment in the test case FCA brought to seek clarity on key issues on business interruption insurance policies and how they have reacted to COVID-19-related claims. Overall, it agreed with the arguments FCA had advanced on behalf of policyholders. Briefly:
- the Court held that the majority of the “disease” and “denial of access” clauses in the sample wordings provided provide cover in the circumstances of the pandemic, and that the trigger for cover caused the policyholder losses – but in some cases whether cover would be provided depends on the detailed wording of the clause and how the business was affected by the Government response to the pandemic. As an example, this would include whether it was ordered to close (for instance, restaurants could be in different positions depending on whether they operated a take-away business or were solely for sit-in customers). The court was not impressed by arguments that cover was just for local occurrences of notifiable diseases;
- the Court clarified that the pandemic and the Government and public response were a single cause of the covered loss.
We’ve also written a more detailed summary of the judgment.
FCA was pleased with the judgment, with Christopher Woolard calling it a “significant step” in resolving the uncertainty policyholders have been facing. He said insurers should act now, irrespective of what might be appealed, to;
- work out how they can now move to progress the claims the judgment says should be paid; and
- clearly communicate with policyholders whose claims are affected by the judgment to tell them what happens next.
FCA has arranged for policyholders, action groups, intermediaries and their lawyers to speak to it on 21 and 22 September if they wish.
If there is to be an appeal, all parties are agreed that this should happen as soon as possible, and might consider a leapfrog appeal straight to the Supreme Court.