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Roger Billins

The recent court decision on the interpretation of business interruption clauses in commercial insurance contracts is welcome news to many SME companies. Many companies thought they were covered for the losses sustained by them as a result of the pandemic lockdown but in most cases, their insurers rejected claims upon the basis that the cover provided for loss sustained by way of business interruption did not extend to the lockdown.

The Financial Conduct Authority asked the High Court to make declarations as to the meaning of the relevant clauses in a variety of insurance policies issued by the leading underwriters in the field. The Court held that most of the policy wordings provided in principle cover for losses suffered by businesses as a result of Covid-19. However, this is only stage 1. Insured claimants must bring themselves within the definitions favoured by the court, that is either that the business interruption suffered by them was caused by the occurrence of a notifiable disease within a particular area covered by the policy or that access to the business premises was prevented or hindered by lockdown restrictions. The insurers have confirmed that, in order to prove the presence of Covid-19 within the area of the business, companies can use NHS statistics. It is to be hoped that insurers will negotiate sensibly with claimants although there is no doubt that litigation will be necessary in some cases. For how UNITY can help you, please contact