Supreme Court backs small firms over business interruption insurance claims

Tens of thousands of small businesses are set to receive insurance payouts on disputed coronavirus business interruption claims, following a court ruling.

The Supreme Court found largely in favour of small firms receiving payments from business interruption insurance policies, covering losses from the first national lockdown.

The Financial Conduct Authority (FCA) brought the test case which focused on a representative sample of 21 types of insurance policy.

Eight insurers agreed to take part in proceedings.

The ruling comes after a High Court judgement, handed down in September, was supportive of the estimated 370,000 companies said to be affected by the dispute.

Firms such as pubs, cafes and beauty parlours argued they faced ruin when they were turned down by insurers for business interruption policy claims on losses caused by the first coronavirus lockdown last year.

Appeals were launched on both sides and the legal process was fast-tracked to the highest court in England and Wales, which rejected the insurers' arguments and said it had “substantially allowed ” the appeal brought by the FCA and an action group to clarify the position.

Chamber members RLK Solicitors have been fighting for businesses prior to the first lockdown in March, following complaints by many of their clients and other organisations across the UK.

The firm is acting for more than 600 clients.

Satish Jakhu, director of RLK Solicitors, said: "We are currently acting for over 600 clients and this is very welcome news. Now the hard work starts in getting our clients the damages they deserve.

"We have settled some cases and are receiving settlement offers from insurers, however, as would be expected these offers do not represent the true losses our clients are entitled to. Some insurers are unreasonably shirking their responsibilities by saying this judgement does not affect their legal liability.

"For those insurers who accept this is the end of the road, there is still a fight to be had surrounding quantum. Insurance companies are using 'technicalities ' to stop claims dead in their tracks; examples include late notification of the potential claim, solvency of the business and the information provided to the insurance company/broker at the time the policy was taken out. ”

Chris Guy, from RLK's Business Interruption Team, is urging affected businesses to "double and triple check insurance policies", adding: "Having spoken to thousands of businesses it is clear many either did not realise they had this cover or accepted the insurance company 's incorrect denial of cover.

"We are a team of expert solicitors specialising in insurance law who have assembled a world class team of barristers (including Queens Counsel and part-time judges from Birmingham based 3PB Barristers) and forensic accountants.

"To support our clients, we are helping on a no win no fee basis which gives full access to our expert team. This is the least we can do to save businesses from the crippling effects of Covid-19, in particular the hospitality, leisure, and retail sectors."

Paul Faulkner (pictured), chief executive of Greater Birmingham Chambers of Commerce, said: “This ruling provides welcome clarity for businesses and insurers alike on some of the most common questions regarding challenges to business interruption insurance during this pandemic.

“Of course, it is important to note that it does not cover all wordings or delivery a ruling on individual policies. What it does do is given insurers and businesses a clear way forward on settling many of these disputed claims.

“It will be a great source of relief to those businesses who have brought this action and those that will see the impact of this ruling, many of whom have been hard hit by Covid-19. ”

Businesses can have their insurance policies reviewed for free by RLK Solicitors by visiting www.biiclaims.co.uk/contact and providing a copy of your insurance policy.