Financial Conduct Authority successfully wins appeal at the Supreme Court in significant insurance case

In a landmark case, the Supreme Court has today found in favour of small firms receiving payments from business interruption insurance policies relating to COVID-19 claims.

The Financial Conduct Authority (FCA), brought the test case, with eight insurers agreeing to take part in proceedings. It was fast-tracked to the Supreme Court, which heard four days of legal representations in November 2020.

The complex ruling covering issues such as timing of lost earnings, disease clauses, and whether businesses were denied access to properties, provides authoritative guidance for these policies, and potentially to a further 700 policies which were not part of the case. The FCA, the insurance sector, and the Financial Ombudsman will use the judgment to guide their decisions in those other cases in 2021 and beyond.

The FCA estimates that up to 370,000 policy holders are likely to be affected by the outcome of the case.

The Association of British Insurers has commented that "Customers who have made claims that are affected by the test case will be contacted by their insurer to discuss what the judgment means for their claim.” However, we encourage you to consider contacting your insurer directly if you are seeking specialist advice.

An important point to note is that this relates to the lockdown of last spring for subsequent lockdown insurance policies will have been amended to remove ambiguity for either new or renewing customers. Therefore, losses from the latest lockdowns would be clearly stated as part of the cover - or not.

These notes have been prepared for the purpose of articles only. They should not be regarded as a substitute for taking legal advice.