Business Interruption Insurance – The Coronavirus Test Case

17th July 2020

Businesses in every sector have suffered throughout the COVID-19 lockdown, with many losing their entire business revenue overnight and some never likely to trade again.

Business interruption (BI) cover is intended to provide some protection to businesses that are disrupted or unable to trade because of a reason covered by the insurance policy. Many businesses have therefore already made claims, citing the global pandemic and COVID-19 lockdown as the cause of their loss.

Whilst many BI insurance policies explicitly exclude the type loss caused by the COVID-19 crisis, there will be policies that appear to cover such claims and oblige insurers to pay out. Unsurprisingly, insurers are very reluctant to do so, and many claims have already been rejected.

Law firms like ours, continue to be approached by business owners who are seeking redress, with calls for insurance policy holders to band together and pursue group litigation, sharing the costs of bringing the claim to the courts.

In light of the widespread concern about the lack of certainty for some customers making such claims, the Financial Conduct Authority (FCA) has filed a test case in the High Court against some of big names in the sector, including Hiscox and Zurich.  The hope is that the ruling will reduce the number of disputes in the future by clarifying the meaning of various phrases frequently found in BI insurance policies.

Proceedings were issued on 9 June, and are proceeding through the High Court with an 8 day hearing due to conclude on 30 July 2020.

The decision will only bind those insurance companies that have been joined in the proceedings. However, it is likely that the wording contained in their policies will be similar to that used by other insurers across the industry. The decision will therefore be very influential, and for this reason is eagerly awaited.

If a business has submitted a claim and already agreed a full and final settlement figure, its claim will be unaffected by the Test Case. The Test Case also does not prevent businesses from settling claims in progress, but those businesses should be informed by their insurers before they agree a settlement figure, if the outcome could affect their claim.

If you have made a claim for business interruption and had it declined by your insurers, the Test Case might cause your claim to be re-assessed, but your insurers should already have contacted you to explain this. They have until 22 June to do so. If you have not heard from them by then, we suggest you contact them directly.

You can find more information about the Test Case on the FCA website.

While we await the outcome with interest, if you have any issues relating to your business that you would like to discuss with an experienced Solicitor, please speak to Adam Pike, an Associate Director here at Ansons on 01543 431 197 or email

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