UK Supreme Court holds in favour of businesses over business interruption insurance claims Image

Nicholas Gomez 

The Supreme Court has today (15.01.2021) handed down its judgment requiring insurers to pay out on business interruption claims made where access to business premises is restricted on account of closures of businesses made necessary by the Covid pandemic even if there is no actual legislation ordering closure.

The 114 page judgment will give solace to the many businesses whose claims had been declined by insurance companies with the argument that on a reading of their policies businesses would have had to stop operating anyway and not because of any trigger within the wording of the policies.

In his judgment, Lord Briggs said “The consequence therefore is that, on the insurers’ case, the cover apparently provided for business interruption caused by the effects of a national pandemic type of notifiable disease was in reality illusory, just when it might have been supposed to have been most needed by policyholders. That outcome seemed to me to be clearly contrary to the spirit and intent of the relevant provisions of the policies in issue.”

It is thought that the decision will cost insurers in the United Kingdom approximately £1.2 billion.

The insurers which had supported this test case, mounted by the Financial Conduct Authority will now set about paying the disputed claims.

It is understood that several claims by Gibraltar businesses under their policies were declined last year. They will now have to be reconsidered and payments made as appropriate.



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