Since the outbreak of the COVID-19 pandemic there have been many reports in the press about businesses who had taken out Business Interruption insurance (BI) and were required to close by the UK government’s lockdown, having had their claims for losses rejected by their insurance companies.

A pandemic is a very rare event - perhaps only occurring once in 100 years - and many insurance policies are not entirely clear as to the cover provided in such circumstances.  Given the complexity of the situation and the high cost to SMEs of fighting a rejected claim, the Financial Conduct Authority (FCA) has approached the High Court in London to examine the wording of a number of policies submitted by major insurance companies with the aim of resolving the contractual uncertainty surrounding BI claims.

Formal proceedings began on 9 June and the case is expected to be heard during a 5 to 10-day hearing at the end of July 2020. The court’s findings are expected to be made public in August.

The ruling of the court will be legally binding on the insurers taking part in the test case and will give what the FCA calls ‘persuasive guidance’ for the interpretation of similar policy wordings by the Financial Ombudsman Service and the FCA when considering whether claims are being handled fairly.

Martin Brock, a solicitor with Public Loss Adjusters Ltd who has experience of working with moving companies, said that should the case be resolved in favour of the insured, movers should re-submit their claims even if they had been previously rejected.  He said, “If a claim has already been rejected, the insured should contact the insurance company and ask for the case to be reopened in light of the court’s ruling and that a breakdown of their losses covered by the policy will follow in due course.”  He also added that should any moving company receive a questionnaire from their insurance company between now and when the case is resolved, they should not complete it as this may prejudice their claim.

The FCA is issuing regular updates on the progress of the case on its website, which can be viewed here.