• Date

    18 Sep 2020
  • Category

    Forensic Accounting

High Court hands down it’s judgement in the FCA test case for COVID business interruption claims.

The test case was brought about by the FCA to bring clarity, after some insurers said that their business interruption insurance policies would not cover COVID-19 claims.

In a statement the FCA said that the court ruling said that in most cases the disease clause wording in the test case provided cover for the policyholder.  The FCA did say however, ‘that the judgement did not say that the eight defendant insurers are liable across all of the 21 different types of policy wording in the sample considered in court, each policy would need to be considered against the detailed judgement to work out what it means to that policy’.

Martin Chapman, Partner, Forensic Azets, commented: 'As a result of this decision we can expect insurance companies to tighten future policy wording and increase premiums.

'This will no doubt make it more difficult for companies to get the business interruption insurance cover they want and increase the price of their insurance. 

'The benefit of the decision is it gives many struggling companies a lifeline that could potentially see them through the current crisis, which will support jobs and investment.

'Optioning for a test case was the only real option to settle the matter. It saved business and the courts vast amounts of time, as well as unnecessary cost, by avoiding the need for individual litigation.

'It has greatly accelerated the whole process, meaning any pay-out is achieved while the insured remains a going concern.

Although, this is a great result for Policy Holders, we wait to see how the Insurers react to this outcome and whether an appeal may happen. I hope this isn’t the case so a clear line of direction is kept in these already uncertain times.”


What should you do next?

  1. Review your policy to see if you are eligible to claim.
  2. If you have already made a claim that was rejected prior to this case, you may be able to resubmit your claim.
  3. Check to see if you are covered for any additional extras such as professional services

If you need any help with your business interruption claim please contact the Forensic Accounting team - forensic@azets.co.uk

About the author

Martin Chapman Photo

Martin Chapman

Partner Birmingham
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