Supreme Court business interruption insurance ruling due on 15 January

By Stuart Stone contact

- Last updated on GMT

Decision due: the Supreme Court ruling will impact potentially thousands of pub and bar operators whose insurers refused to pay out amid pandemic-enforced closures last year
Decision due: the Supreme Court ruling will impact potentially thousands of pub and bar operators whose insurers refused to pay out amid pandemic-enforced closures last year

Related tags: Legal, Finance, Insurance, Tenanted + leased, Freehouse, Pubco + head office

The Supreme Court has revealed its ruling on whether insurers should pay out on business interruption claims relating to March’s coronavirus lockdown will be handed down this Friday (15 January).

According to an update on 12 January, a judgement will be delivered at 9.45am and will be available to view via a live stream​ on the Supreme Court’s website. 

Further reading

Regulators v insurers: the verdict​ - Sometimes white smoke appears from a chimney and the result is clear. Sometimes, smoke rises from the battlefield, casualties are counted and it takes a century or two to work out who won and lost. 

High Court ruling on business interruption insurance offers hospitality operators ‘huge lifeline’​ - The High Court has backed insurance policyholders in the Financial Conduct Authority’s (FCA)’s business interruption insurance test case, offering a 'huge lifeline' for embattled pub, bar and restaurant operators. 

Insurers' appeal 'another nail in the coffin' for trade'​ - Insurers’ decision to appeal a legal judgement on business interruption insurance payouts has been dubbed another ‘nail in the coffin’ for struggling pubs.

Business interruption test case reaches Supreme Court​ - The landmark business interruption test case pitting the FCA against insurers is currently being heard at the Supreme Court, but it could be weeks before a decision is made. 

The decision will refer to a four-day hearing which started on November 16​ after Arch Insurance, Argenta, Hiscox, MS Amlin, RSA, QBE UK and a policyholder action group joined the FCA in seeking clarity on whether policy wordings cover business interruption caused by March’s Covid-19 lockdown.  

The Supreme Court’s decision could potentially impact 700 types of policies, 60 insurers, and 370,000 policyholders, resulting in billions in claims, according to figures published in Insurance Business UK​.

What’s more, the issue’s conclusion will impact potentially thousands of pub and bar operators whose insurers refused to pay out amid widespread, pandemic-enforced, closures last year.  

"We understand that delivery of the judgement may last about 15 minutes, and the full written judgement is likely to be published on the Supreme Court's website very soon after that,” the Financial Conduct Authority (FCA) said.

Dragging their feet?

As reported by The Morning Advertiser (MA)​, the High Court initially backed insurance policyholders in September​ by ruling the majority of businesses that held business interruption insurance and were forced to close due to the Covid-19 pandemic were entitled to compensation. 

It was also ruled that, subject to the limits of each policy, compensation should return businesses to the position they would have been in had the pandemic never occurred. 

However, the case reached the Supreme Court in November after the aforementioned insurers and the FCA sought to appeal aspects of the judgement.​ 

Speaking in October, Sonia Campbell – the Mishcon de Reya partner leading legal action on behalf of Hospitality Insurance Group Action (HIGA) – said the appeal was another attempt by insurers to delay paying out​. 

“The decision by insurers to appeal is another nail in the coffin for small businesses across the country. 

“Rather than agreeing to abide by the court's judgement and now pay claims, it is disgraceful insurers continue to drag their feet and watch more and more of their own policyholders go to the wall. 

“The action of the insurers shows exactly why there is a need for policyholders to join forces and take action together”.

Related topics: Legislation

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