The FCA has been seeking a court ruling on the validity of the Business Disruption insurance with regard of to the Coronavirus Outbreak. A test case has used a sample of 21 different types of policy wording from eight different insurers. The judgement has now been published, while the judgment is long and complex for a number of reasons (including the fact that the wording of different insurance policies varies significantly) the FCA’s press release states that judgment concludes that most, but not all, of the “disease clauses” in the insurance policies considered, do provide cover for business. It also says that certain “denial of access” clauses in the sample provide cover, but this depends on the detailed wording of the clause and how the business was affected by the Government response to the pandemic, including whether the business was subject to a mandatory closure order and whether the business was ordered to close completely.
The test case has also clarified that the Covid-19 pandemic and the Government and public response were a single cause of the covered loss, which is a key requirement for claims to be paid even if the policy provides cover. The FCA and Defendant insurers are now considering the judgment and what it might mean in respect of any appeal.
Copy of a summary of the Judgement put together by the FCA’s legal team