High Court to rule on business interruption insurance

David Elliott is a chartered accountant and insolvency practitioner for CVR Global, with over two decades’ worth of experience with corporate recovery, business and personal insolvency.


The Covid-19 pandemic has brought previously unseen disruption and closure of businesses – with many now looking to secure cover for losses under business interruption policies.


These unprecedented circumstances have seen many businesses make adjustments to their operations to cope with the pressures lockdown has brought.


Despite the significant assistance and wide ranging financial support from Government, many companies have still made significant losses.


This has resulted in many directors looking towards their business interruption insurance cover to help mitigate the position – however, they have subsequently found claims against their policies being rejected.


There could be change on the horizon with regards to success rates on these claims after the Financial Conduct Authority (FCA) launched a test case in the High Court.


It’s due to be heard in late July 2020 and will involve around 40 insurers and look into the wording from 19 policies.


The case could help to clarify the position for both policyholders and insures alike. It is hoped that the High Court will move swiftly and quickly to publish its decisions to aid as many businesses as possible to pursue claims – presuming that the court finds in favour of the insured.


This is certainly something that accountants should be looking to advise their clients on and businesses should be watching the developments closely.


Many will have been concentrating on simply keeping their business afloat over the last three months and may not have even considered making a claim under their insurance policy.


It could be a case that they aren’t even aware that they could be covered under their existing insurance for the effects of the Covid-19 pandemic.


However, given the action now being taken by the FCA, it’s vital that policies are reviewed to check whether policy holders will be eligible to make a claim.


This is a complex area and we would recommend taking professional advice on the specific policy wording.


Clearly the result of the test case is going to be awaited eagerly by both sides and will no doubt generate headlines in late July or early August, but now is the time to take action!