Business interruption insurance test cases begin in court

High Court test cases to determine if insurers should pay out business interruption claims related to Covid-19 will commence today.

The Financial Conduct Authority (FCA) has looked to the court to provide clarity for business owners and the insurance industry. A hearing, taking place over eight days, will begin this morning before Lord Justice Flaux and Mr Justice Butcher.

The FCA said it has reviewed 500 relevant policies and identified a sample of 17 wordings that capture "the majority" of issues under dispute, which will be considered by the court.

Eight insurers will participate in the action, however more will be impacted as they have used similar wording in their policies. The eight insurers taking part are: Arch Insurance (UK), Argenta Syndicate Management, Ecclesiastical Insurance Office, Hiscox, MS Amlin Underwriting, QBE UK, Royal & Sun Alliance and Zurich.

Many businesses have had business interruption claims denied, with insurers claiming the Covid-19 pandemic was not covered in policies.

The FCA has previously said that in “the majority” of cases businesses will not be covered, but that these test cases will examine a limited number of policies where arguments for claims can be put forward.

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