Explained: how to claim business interruption insurance

By Nikkie Thatcher

- Last updated on GMT

Research required: the Financial Conduct Authority (FCA) has published a list of policies where the relevant insurers has found in their review the test case may affect the outcome on claims generally.
Research required: the Financial Conduct Authority (FCA) has published a list of policies where the relevant insurers has found in their review the test case may affect the outcome on claims generally.

Related tags: Insurance, Legal, Legislation, Finance, Supreme Court

While the Supreme Court ruled most business interruption insurance policyholders will have cover for losses due to coronavirus restrictions, which was hailed as a “massive boost”, it doesn’t necessarily mean everyone who had this insurance can be compensated.

The Morning Advertiser ​takes a closer look at what the Financial Conduct Authority (FCA) has said on the case and the impact for policyholders.

On what the judgement means for policyholders, the FCA said: “The test case was not intended to encompass all possible disputes but to resolve some key contractual uncertainties and ‘causation’ issues to provide clarity for policyholders and insurers.

“[The] judgement does not determine how much is payable under individual policies but provides much of the basis for doing so.

“Following the High Court’s judgement, insurers decided to pay claims on some policies and we asked insurers to progress claims on other policies the High Court said provided cover so they could be settled quickly following appeals to the Supreme Court.

“We will now work with insurers so that they rapidly conclude their claims processes on claims that the Supreme Court has said should be paid, providing interim payments wherever possible.   

“Each policy needs to be considered against the detailed judgement to work out what it means for that policy. 

“Policyholders with affected claims can expect to hear from their insurer soon. Policyholders with questions should approach their broker, other advisers or insurer. 

“Policyholders who remain unhappy following their insurer's assessment of their claim may be able to refer their claim to the Financial Ombudsman Service, whose role is to resolve individual disputes.”

The Morning Advertiser ​takes a look at the details around the case.

Who can claim?

The FCA has published a list of business interruption policies where the relevant insurers has found in their review the test case may affect the outcome on claims generally.

This can be found here​.

However, it should be noted the court case did not include every single policy from all insurers but, as The Morning Advertiser​ understands, it was just addressing policies it felt were ambiguous and not – those listing diseases and not covering Covid-19 and those that said the disease had to be discovered at the premises.

The watchdog stated where a policy is not included on this list, it could be for a number of reasons including but not limited to the policy wording being a type not being tested in the test case.

It gives the example of containing an exhaustive list of diseases only or requiring the presence of the disease at the premises or the policy containing a relevant exclusion that is not being tested.

The list does not include policy wordings that are only held by fewer than five policyholders.

How to claim?

The FCA has published draft guidance for policyholders to help prove the presence of coronavirus, which is a condition in certain types of policy.

This can be read here​.

What happens next?

According to the FCA, the Supreme Court’s judgment will be outlined into a set of declarations, which the authority is working with defendant insurers on, alongside the court to issue these.

The watchdog will also publish a set of questions and answers to help them understand the case alongside a list of business interruption policy types that could respond to the pandemic based on data from insurers.

Related topics: Legislation

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