Insurers forced to U-Turn following supreme court ruling!
It is the news many businesses did not expect to receive and some had given up on, however all will be over-joyed by the announcements a couple of days ago.
This weekend the Supreme Court ruled that insurance companies who offered cover for ‘notifiable diseases’ extended to losses resulting from Covid-19 and therefore must now pay out for business interruption claims for businesses who were forced to close their doors during lockdown 1.0.
In the initial lockdown which started in spring 2020, many small businesses picked up the phone to their insurers comforted by the fact they had paid their premium.
Most made claims through business interruption insurance policies for loss of earnings when they had to close. Unfortunately, many insurers refused to pay, arguing only the most specialist policies had cover for such unprecedented restrictions.
This sparked a watchdog investigation who brought a High Court case to gain clarity on what should be done regarding pay-outs and future coverage after over 400 SME’s raised their concerns when their claims were denied.
As a result, it was agreed that a selection of policy wording should be tested in court, setting the parameters for what would be considered a valid claim.
On 15th January 2021, a landmark, very complex, ruling was made that covered issues such as disease clauses, whether business were denied access to the properties, and the timing of lost earnings.
It is thought that tens of thousands of businesses and potentially hundreds of thousands of jobs could see a positive impact from this decision which is estimated to cost insurers up to £1bn in pay-outs.
What to do if you think you have a claim?
First, review your insurance documentation to understand whether Covid-19 related losses will be covered.
It is understood that policies covering ‘notifiable diseases’ will be covered under the ruling, so look out for similar wording.
If you believe you will be eligible to claim, contact your insurance provider (at the time of the first lockdown) and begin proceedings.
Since the pandemic began, commercial insurance policies have been amended for new and renewing customers, with lockdown losses clearly stated as part of the cover. Please check your policies and ensure you understand and agree to the cover you have in place.
As always, should you need information, help, or have any questions, please call us on (01482) 888820.
Information source: BBC NEWS / AccountingWeb / ICAEW