About The Business Interruption Insurance Ruling

Business interruption insurance is a policy taken out by businesses to help them sustain and stay afloat when factors from outside of their control severely affect their trading over a prolonged period. Two of the main causes that the insurance policy primarily protected businesses against and covered for before COVID was fire and flood damage. Claiming on your policy allows you to claim against the revenue that is being lost as a consequence of said damage.

Business interruption insurance isn’t an essential policy; however, it has a lot of value to businesses. Take customer loyalty for example. Without trading, you can’t supply your services or your products to your customers. If your customers can survive without your services for a few months then the damage might be fixable, however, if not you might end up having to compensate them which you don’t want to be doing out of your (or the businesses) pockets.

However, when COVID arrived, it disrupted undoubtedly every single industry out there. If not causing businesses to stop trading, it severely restricted their trading in a best-case scenario. And so this posed a big question. Would the loss of revenue and the damage caused by ceasing trading be covered under the business interruption insurance policy? Well, unions and businesses alike of course argued that it should, however, the major insurance firms argued otherwise.

This led to a dispute that ran up to the high court where a judgement was handed down in September 2020 ruling in favour of the businesses and judging that the losses can indeed be covered under the policy. However, insurance giants such as Hiscox, RSA, QBE and many more then escalated this ruling to the Supreme Court in an attempt to get it overturned.

However, today we have found out that the Supreme Court has upheld this ruling. A decision that has brought a huge sigh of relief no doubt to some 370,000 businesses that have been affected by this. With collectively the claims amounting to £1.2 billion.

It should be noted that this ruling covers the losses suffered by businesses in the first lockdown that started from March 2020 and lasted into the early Summer of 2020 and not any subsequent lockdowns so far. However, the precedent has now been set.

If you’re a business that has been affected by the first lockdown and you had your business covered at the time by the business interruption insurance you may well be entitled now to claim on the venue lost due to the first lockdown. If you want to know more about how the ruling has affected your business get in touch with a member of our team and we can answer any questions you may have.

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