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Business interruption (BI) insurance – FCA Test Case now underway

In the early days of lockdown, I issued a brief update in which I expressed the view that companies with the benefit of ‘Covid responsive’ BI insurance cover would be in the minority. 

Whilst that remains the position, those with cover which may or may not respond depending on various matters of interpretation have been offered a glimmer of hope by the FCA’s test case which commenced this week at the High Court in London. 

Many insurers faced with a wave of claims by policyholders as the crisis began to hit cashflows reacted by issuing standard/blanket rejections.  The test case questions the validity of several general grounds of rejection and seeks clarity over the meaning and effect of various sample policy wordings in the context of the pandemic. 

The case is set to run for 8 days over this week and next.  It remains to be seen whether the turnaround time for the judgement keeps pace with the breakneck speed of the proceedings to date.  We will post an update as soon as the decision is available. 

In the meantime, businesses hoping to rely on BI cover would be well advised to keep detailed records of losses sustained.

Watch this space! 

Kirsten Magee, Senior Associate


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