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Supreme Court backs policyholders in lockdown insurance dispute Published Date: 15/01/2021

The Supreme Court has today (15 January) ruled that the ‘vast majority’ of business interruption insurance policyholders will have cover for losses incurred due to national Covid-19 measures.

The Morning Advertiser reports that the court said it “substantially allows” the appeal by the Financial Conduct Authority (FCA) and campaign groups Hiscox Action Group and Hospitality Insurance Group Action which came after leading insurers contested insurance claims made by businesses faced with enforced closure or significant losses due to March’s lockdown. 

The Supreme Court’s decision could potentially impact 700 types of policies, 60 insurers, and 370,000 policyholders, resulting in billions in claims, according to figures published in Insurance Business UK​.

What’s more, the decision will have consequences for potentially thousands of pub and bar operators whose insurers refused to pay out amid widespread, pandemic-enforced, closures last year.

Speaking about the case, Richard Leedham, partner at Mishcon de Reya that represented the Hiscox Action Group – said: "We are glad that the Supreme Court has found that the vast majority of policyholders of non-property damage Business Interruption cover will have cover for their business interruption losses caused by the national response of Government to Covid-19.

“The Supreme Court has recognised that, just when this cover was needed most by thousands of UK businesses, insurers were wrong to argue that coverage was applicable only if there were narrow local restrictions, that they could deny claims because the cover had not been intended to be provided and/or because the interruption and therefore losses would have happened in any event. 

“The judgment should be a massive boost to all businesses reeling from a third lockdown who can now demand their claims are paid,"

"The hope and expectation of our clients is that the claim adjustment process starts immediately and that insurers will not continue to cause further distress by further unnecessary delay."   

Source: The Morning Advertiser