Coronavirus (COVID-19)—business interruption insurance claims after the FCA test case

The following Insurance & Reinsurance practice note provides comprehensive and up to date legal information covering:

  • Coronavirus (COVID-19)—business interruption insurance claims after the FCA test case
  • Business interruption—damage clauses
  • ‘Loss’ in the context of a damage clause
  • ‘Accidental’ loss or destruction
  • Damage consisting of ‘inherent vice’ or ‘gradual deterioration’
  • Causation in damage clauses
  • Disease clauses—closed lists
  • Local policies
  • Denial of access
  • ‘At the premises’ wordings
  • More...

Coronavirus (COVID-19)—business interruption insurance claims after the FCA test case

Business interruption insurance is typically sold as an extension to commercial property policies. Most business interruption cover requires losses to result from damage to insured property. There is no standard form of business interruption insurance and some policies include additional extensions for business interruption cover, such as denial of access or closure by a public authority.

In March 2020, following the coronavirus (COVID-19) lockdown, many businesses sought to claim under their business interruption insurance for coronavirus related losses, but few were indemnified due largely to uncertainty as to how business interruption policies with non-damage extensions responded to a national outbreak of infectious disease.

The Financial Conduct Authority (FCA), in consultation with policyholders and insurers, commenced a test case under the Financial markets test case scheme.

The first instance hearing took place in July 2020 and judgment was handed down on 15 September 2020. See News Analyses: Coronavirus (COVID-19) business interruption test case—post-judgment analysis—construction, composite perils and causation, LNB News 15/09/2020 70 and LNB News 15/09/2020 69.

Six of the insurers (Arch, Argenta, Hiscox, MS Amlin, QBE and RSA), the Hiscox Action Group and the FCA were granted permission to appeal certain points arising out of the first instance decision to the Supreme Court (bypassing the Court of Appeal). The hearing took place remotely before Lord Reed, Lord Hodge, Lord Briggs, Lord

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