Firms who pay business interruption insurance will learn today if they will be able to claim after being shut down by the Covid-19 crisis. The Supreme Court will make the ruling which could see over a billion pounds worth of insurance paid out to struggling businesses.
Waste of money
The BBC reported on London hair salon The Drawing Room that pays £1,200 a year for business interruption insurance but has been denied so far meaning paying the annual premium is effectively a waste of money.
Kevin Peachey reported: “Small businesses are eagerly awaiting a Supreme Court ruling on insurance payouts for those forced to close during the first national lockdown. Many claimed on business interruption insurance policies, but insurers refused arguing there was no cover for such unprecedented restrictions. It was agreed that a selection of policy wordings be tested in court.
“The case has implications for 370,000 small businesses, and involved potential payouts of £1.2bn. Judges at the Supreme Court will set the parameters of whether or not valid claims can be made under these policies. The High Court earlier found mostly in favour of insurers having to pay out to policyholders, in what was regarded by many commentators as a surprise defeat for the insurance sector.”
Today’s ruling is the final judgement in the case, and will be have implications for all disputed business interruption insurance cases as it will set a legal precedent.
James Ollerenshaw’s hair salon was one of those businesses unable to operate during the first national lockdown.
The Drawing Room in London’s Spitalfields is owned by James Ollerenshaw who paid an annual premium of £1,200 for business interruption insurance, and importantly disease cover came as part of it. His insurers insisted that the pandemic was not included in the cover. He said if the insurers are forced to pay it would help to cover some costs such as rent but the business would still be in debt due to the shut downs.
Axbridge Chamber of Commerce member Ian Carrotte of ICSM Credit blasted the insurance firms who he said ‘had tried to wriggle out of their obligations.’
He said: “The Financial Conduct Authority brought a test case against some of the big insurers to see if their arguments stood up in court. The High Court only found in favour of a couple of the insurers’ policies with the rest of the policy types that give cover to thousands of small businesses held to be valid and should be paid.”
Today’s ruling in the Supreme Court is over the High Court’s verdict on the two insurers it found in favour which are appealed by the Financial Conduct Authority.
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