COVID -19 Business Interruption Test Case Update:

Nowell & Richards are keen to keep you up to speed as to the recent business interruption test case.

The case was heard originally in the High Court in June/July 2020 & subsequently in the Supreme Court in November 2020. The case was between the Financial Conduct Authority (FCA) acting for policyholders, action groups & several insurers plus a sample of their policy wordings.

The test case reviewed and challenged a representative sample of 22 policies with 8 different insurers. Click here for a list of the affected insurers.

All sample policies were considered to be potentially ambiguous & allowed them to be challenged by the FCA and their legal team. 

The High Court previously handed down its judgment, which mainly found in favour of the FCA & the arguments made on behalf of policyholders. However insurers appealed a number of points to The Supreme Court with the judgement being issued on 15th  January 2021. Click here to read the full judgement summary of 112 pages.

Next Steps:

N & R & insurers are currently reviewing the judgement & will contact customers who may be affected.

Moving forwards it is important to understand that only policies where there was ambiguity in policy wordings and/or clause interpretation that have been challenged.

Unfortunately the vast majority of policies are clear on their intent & do not provide any cover for the ‘global pandemic’ situation faced with COVID-19. 

As the test case was based on a sample of wordings, there is a requirement for all insurers in the UK & not just those involved in the test case to review their policy wordings & the interpretation of some of the key clauses within.

Please click here to see the dedicated FCA web page.

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