Insurers Must Pay Businesses for Pandemic Claims, British Court Rules

At issue in the case were two terms that appeared in many of the policies: “disease clauses,” which cover losses from any occurrence of a disease that must be reported to authorities, and “prevention of access clauses,” which cover losses when public authorities block access to the business premises. Insurance companies argued that the pandemic did not meet the terms of either of those clauses. But court appeals found that the pandemic, and the instructions from the government to stay home and shutter businesses, were covered by the insurance policy terms.

“Today’s judgment is a big victory,” said Mike Cherry, the chair of the Federation of Small Businesses. “It has been a long and difficult road to get to this stage, so this will bring clarity and hope to the thousands of firms which have been left in financial limbo for almost a year.”

Hiscox said that because of the ruling and additional government lockdowns in Britain, it expected to pay $48 million more in business interruption claims in 2020.

The Supreme Court also ruled that companies could make claims for the partial closure of their business, and for orders to close that were not legally binding — in many cases, for example, the government has repeatedly asked businesses to close days before putting the policy into law. The Financial Conduct Authority said that this meant more businesses would have valid claims and some payouts would be higher.

Sheldon Mills, the executive director of consumers and competition at the financial services regulator, said the regulator was working with insurers to get payments made as quickly as possible and have interim payouts wherever possible.

“As we have recognized from the start of this case, tens of thousands of small firms and potentially hundreds of thousands of jobs are relying on this,” Mr. Mills said.

Article source: https://www.nytimes.com/2021/01/15/business/britain-small-business-insurance-coronavirus.html