LITIGATION

Landmark Business Interruption Victory for FCA

The High Court has handed down its verdict on the Financial Conduct Authority (FCA)’s test case and largely ruled in favour of policyholders and stated that the majority of those who held business interruption insurance and were forced to close were entitled to compensation. The court reviewed 21 sample policies which included clauses regarding notifiable diseases and clauses concerning the prevention or hindered ability to access premises.

The court held that notifiable diseases did not need to only cover a local occurrence of such but an existence of a peril of COVID-19 within the allocated range of the clause.

In regards to the business owner’s ability to access their premises, the court concluded that “inability” to use premises had a different meaning to clauses using the word “hindered”. Policies including “prevention” were found to require a closure of premises. Therefore policyholders should look carefully at what wording was included in their policy and the documented reasons for their closure if applicable.

The FCA estimate that this case covers approximately 370,000 policy holders. The judgment is legally binding on those insurers involved, such as, Hiscox, Royal & Sun Alliance and Zurich. The case will provide persuasive guidance for the interpretation of similar policy wordings for insurers not included in this action.

The High Court’s conclusions will be welcome news to a large number of policyholders with Christopher Woolard, Interim Chief Executive of the FCA, commenting that the judgment, “is a significant step in resolving the uncertainty being faced by policyholders.” Though arguably a victory in many ways, the full workings and impact of this judgment will only be seen in time as the detailed judgment is fully processed. Policy wordings and the individual circumstances of each claim must be examined in detail.

Mishcon de Reya LLP represented the Hospitality Insurance Group action which supported the FCA during proceedings and have announced they are preparing to widen their group action against insurers to include contracts that contain a “resilience” policy. Sonia Campbell, a partner and insurance specialist from the Mishcon de Reya is quoted as saying that they believe that “Aviva and RSA were wrong not to pay their policyholder claims.”

If you now find yourself in a position to contest the denial of insurance recover as a result of this judgment then please get in touch with Caroline Prunty who is already representing a number of clients arising out of COVID-19 Damage insurance claims.

For further advice in assessing your business interruption claim please contact MMW Head of Litigation , Caroline Prunty on 028 90200050 or email caroline.prunty@mmwlegal.com.

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