By Kristy Dorsey
Pubs, clubs and other late-night venues are said to be “thrilled” with a ruling that has cleared the way for at least some of the hundreds of thousands of business denied pay-outs on insurance claims linked to the Covid-19 crisis.
In a lawsuit estimated to affect 370,000 UK small businesses of all types, London judges have ruled that some of the world’s biggest insurers were wrong to reject claims for closures and disruption caused by the pandemic. The case, which hinged around the wording in business interruption (BI) policies, is though to affect more than 60 insurers and 700 different types of policies, with up to £4 billion in claims on the line.
Speaking yesterday, the Night Time Industries Association (NTIA) described the ruling from the test case brought by the Financial Conduct Authority (FCA) against eight insurers as an “invaluable win”.
“This verdict is just what we’ve been waiting for,” NTIA chief executive Michael Kill said. “The night-time economy has been one of the hardest hit by lockdown measures during the pandemic, and many businesses are grassroots, family-owned venues that are cultural cornerstones of towns and cities across the UK.”
However, the Association of British Insurers said the judgement “divided evenly” insurers and policyholders on the main issues, with the Federation of Small Businesses called it a “partial” victory.
The FCA concurred, noting that the judgement did not say that the defendants were liable across all of the 21 different types of policy wording in the representative sample considered by the court: “Each policy needs to be considered against the detailed judgement to work out what it means for that policy.”
At 162 pages, the complexity of the judgement suggests that these policy reviews could be time-consuming. The FCA said policyholders with affected claims can expect to hear from their insurer within the next seven days.
“The judgement says that most, but not all, of the disease clauses in the sample provide cover,” the FCA said in a statement.
“It also says that certain denial of access clauses in the sample provide cover, but this depends on the detailed wording of the clause and how the business was affected by the Government response to the pandemic, including for example whether the business was subject to a mandatory closure order and whether the business was ordered to close completely.”
The case affects small and medium-sized businesses across all sectors, ranging from cafes and wedding planners to beauty parlours and events businesses.
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