A win for small firms today as thousands of policyholders will now have their claims for coronavirus-related business interruption losses paid out, after they were initially refused.
During the lockdown last spring, many small businesses made claims through business interruption insurance policies for loss of earnings when they were forced to close. But many insurers refused to pay, arguing only the most specialist policies had cover for such unprecedented restrictions.
It was agreed that a selection of policy wordings should be tested in court, setting the parameters for what would be considered a valid claim. The ruling provides guidance for a wider pool of 700 policies, potentially affecting 370,000 small businesses.
The ruling covered issues such as disease clauses, whether business were denied access to the properties, and the timing of lost earnings. These payouts are expected to help small businesses with major costs such as rent and utilities.
Sheldon Mills, from the FCA, which brought the case on behalf of policyholders, said: “Coronavirus is causing substantial loss and distress to businesses and many are under immense financial strain to stay afloat. Today’s judgment decisively removes many of the roadblocks to claims by policyholders.
“We will be working with insurers to ensure that they now move quickly to pay claims that the judgment says should be paid, making interim payments wherever possible.”
It’s good to hear that small firms will finally receive the financial support they deserve.