15/01/2021 – The Supreme Court has just handed down its judgement, following appeals brought by insurers and the Financial Conduct Authority (FCA) (brought on behalf of policy holders) of the High Court’s judgment of 15/09/2020. The judgment represents the conclusion of a case brought by the FCA, the purpose of which was to clarify terms in insurance policies affording cover for business interruption. Largely, the judgment represents a real success for policy holders, and will result in tens of thousands of payments, providing salvation to businesses across the land, and saving many thousands of jobs.
The judgement is long (112 pages) and it is complex. In essence, there were two appeals for the Supreme Court to decide:
- In its judgement of 15/09/2020, the High Court had found that most of the clauses providing cover for loss suffered on the incidence of disease and certain of the clauses providing cover for loss suffered by being prevented from accessing premises would result in cover and policies being engaged. Six of the insurers appealed these conclusions but the Supreme Court has dismissed those appeals in this final ruling.
- On the FCA’s appeal (for policy holders), the Supreme Court also found in favour of policy holders, finding that cover may be available in circumstances where premises have not been fully closed, but only partially. Further, the Supreme Court has ruled that where there are valid claims, the loss should not be reduced on the basis that it would have been suffered in any event from the pandemic. Insurance cover will also be available where businesses have closed following mandatory, but not legally binding, closure orders.
Clearly, the Supreme Court’s judgment will be good news for many businesses of all sizes. The Court will now draw up a set of declarations which reflect the judgment reached and the FCA has stated that it will publish in due course a set of questions and answers to assist policyholders and advisers in assessing the judgment reached and the effect on individual policyholders’ claims.