Employers that hire veterans in their first employment after leaving the armed forces are now…
A new judgment at the High Court has clarified that policyholders denied business interruption (BI) insurance claims due to COVID-19 may be due compensation.
In an important test case, brought by the Financial Conduct Authority (FCA), the court has found in favour of BI policyholders after many insurers denied pay-outs, claiming that the pandemic was an unprecedented event not covered by existing policies.
In total, eight insurers were challenged at the High Court, which looked into 21 different lead policy wordings to establish whether insurers were liable for pay-outs.
The decision is thought to affect around 370,000 UK businesses, according to the FCA’s estimates, amongst them many businesses that were affected by restrictions imposed by COVID-19.
The result is legally binding on the eight insurance companies involved in the test case. However, the FCA has said that the judgement has removed many of the roadblocks from policyholders in claiming against other insurers where they think they are also due compensation.
Christopher Woolard, interim Chief Executive of the FCA, said: “We brought the test case to resolve the lack of clarity and certainty that existed for many policyholders making BI claims and the wider market.”
He added that insurers should now consider the steps they can take to progress claims of the type that the judgment says should be paid.
“They should communicate directly and quickly with policyholders who have made claims affected by the judgment to explain next steps,” said Mr Woolard.
Despite the FCA’s call for clarity, insurers have asked for more time to put in an application for permission to appeal.
The financial regulator has urged businesses to review their evidence on a case-by-case basis and compare to the judgment.
It added that they should consider that the ruling did not say that the eight defendant insurers are liable across all 21 different types of policy wordings in the sample considered by the court.