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Business Interruption Insurance – Victory for the FCA!

The High Court has today handed down it’s eagerly awaited judgement in a wholly unprecedented test case raised by the Financial Conduct Authority.  The test case sought to achieve clarity for businesses hoping to avail of their Business Interruption cover to recoup losses sustained as a result of the Covid-19 pandemic.  8 major insurers participated in the case and offered up various policy wordings for scrutiny.  The High Court found in favour of the FCA on behalf of policyholders on the majority of the issues in dispute (although, notably, not all policy wordings were held to respond). 

The judgement removes the need in the short term for many policyholders to fight with their insurers over certain points which had been raised as grounds for rejection of claims, including the issue of causation.  It does not have any bearing on the quantification of claims, which could still provide fertile ground for disputes. 

Whilst the FCA have won this battle, the war is most likely to continue in the form of an appeal.  The parties have already agreed that any appeal will be expedited, and this may involve leapfrogging the Court of Appeal in a direct appeal to the Supreme Court.  Watch this space in that regard.

In the meantime, detailed consideration of the judgement will be necessary to determine whether a business’s particular policy wording is covered by the Court’s findings.

Kirsten Magee, Senior Associate


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