Business Interruption Insurance

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Business Interruption Insurance


Many businesses making claims under business interruption insurance policies for losses resulting from business closures, due to the Covid pandemic and restrictions imposed by the Government, suffered a rejection of such claims by many of the insurance companies. Although the insurance companies would base those rejections on interpretations of the wording of the specific policy and the facts on which a claim was based, it was apparent that a number of common grounds were being used by the insurance industry to reject claims.

The scale of the claim rejections and the huge losses suffered by businesses from the start of lockdown at the end of March 2020, caused the regulator of the insurers, the Financial Conduct Authority, to bring a test case before the court to seek clarification on a number of points of principle arising from the wording of specimen policies which insurance companies had cited when rejecting claims.  Judgment in the case was handed down by the court on 15 September 2020 and it gave hope to businesses that they may have better prospects of challenging decisions of insurance companies to reject business interruption insurance claims.

The judgment of 580 paragraph will no doubt keep lawyers interested in the subject for some time to come, and it is almost inevitable that there will be technical points still to be analysed, such as the nature of the evidence that will be required to prove the existence of Covid infection impacting the particular business claiming under the terms of any policy, but for businesses there are two points of principle which should cause them to reconsider any claim rejection from and insurance company seek advice on the prospects of challenging the rejection.

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