The High Court in London has decided in favour of the FCA following an expedited hearing to resolve disputes between various insurers and their policyholders as to whether their Business Interruption policies covered losses sustained as a result of Covid-related lockdowns.
The FCA made the case for policyholders that the ‘disease’ and/or ‘denial of access’ clauses in the representative sample of policy wordings provide cover and that this trigger for policyholders’ losses was incurred as a result of the Covid-19 pandemic and the government mandated lockdowns.
The Judge concluded that most, but not all, of the “disease” clauses in the sample wordings that were considered in the case provide cover to the policyholder. The Judgment also confirmed that certain “denial of access” clauses in the sample wordings provide cover but such cover would be subject to the detailed wording of the clause and how the business was affected by the Government response to the pandemic. This would include, for example, whether the business was subject to a mandatory closure order and whether the business was ordered to close completely.
The test case was not intended to encompass all possible disputes, but to resolve and clarify some key contractual uncertainties and ‘causation’ issues for policyholders and insurers.
Whilst the ruling has been described as a win for policyholders, it does not necessarily mark the end of this dispute. The Insurers have been given the right to appeal directly to the Supreme Court.
The Judgement can be found via this link https://www.fca.org.uk/publication/corporate/bi-insurance-test-case-judgment.pdf
Please contact Edel edel.mccullagh@tughans.com or your usual Tughans contact, who can refer you to the insurance disputes team.
While great care has been taken in the preparation of the content of this article, it does not purport to be a comprehensive statement of the relevant law and full professional advice should be taken before any action is taken in reliance on any item covered.
