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Business Interruption Insurance (“BII”) claims – Six months on from the Supreme Court judgment

What is happening in the world of BII claims following the Supreme Court’s handing down of judgment in January 2021?

We have noticed a tail off in commentary on this issue in the legal and mainstream media. However, we still see BII claims as a fast-developing area of law. We are currently advising and representing clients with BII claims across a wide variety of sectors.

Progressing insurance claims post the judgment

The FCA has developed a number of resources designed to simplify and expedite insurance claims for policy holders since it handed down its judgment earlier this year. These include:

  • Guidance drawing together the ways in which a policyholder may prove the presence of coronavirus.
  • A unique online COVID-19 calculator which searches, by location, the key data sources to establish the presence of COVID-19 in a particular vicinity.
  • A BII policy checker which assists in establishing whether a particular insurance policy may provide the policy holder with cover in respect of a BII claim.

The FCA has stressed that its guidance and tools are not conclusive. Having used the policy checker we agree with the FCA’s view that policyholders should continue to seek advice from professionals in both the use of the various tools and the further analysis that should be undertaken before pursuing, or ruling out a BII claim. Nevertheless, they are very helpful tools which should be considered by all.

How are insurers dealing with claims?

In the last few months, we have seen an increase in insurers completing initial reviews of claims. Our view is that a lot of claims are yet to have been properly reviewed following the judgment. In the main insurers are taking their time to deal with valid claims whilst they have been quick to refuse cover on those claims where the underlying policies either do not provide cover or where there are disputes as to the actual scope of the cover provided.

We remain concerned that some brokers appear too ready to accept insurers’ decisions. We fear that some policyholders, relying as they should do on their brokers to act in their best interests, may be put off making a challenge to an incorrect BII claim denial. We have seen several cases in recent months where brokers have advised on BII claims for their clients concerning policies issued by insurers which form part of their own wider business group and have provided incorrect advice.

In a recent instruction, a broker supported an insurer’s denial on a disease provision clause citing case law incorrectly and informing the insured that the point had been considered by the court, which was not the case. Fortunately, the insured was wise enough to check the accuracy of the advice and then disagreed with the broker’s advice. However, this may be the exception rather than the rule.

Claims Clarke Willmott is pursuing

We currently act for a number of businesses pursuing BII claims, including restaurant chains, a major sports stadium, a county cricket club, a substantial home builder company, a fleet management company, hotels and wedding venues and a French fashion house with outlets in central London, amongst others.

The issues we have advised on in recent months on top of questions concerning whether or not BII cover is present in a policy include whether a claim exists for each lockdown, whether a denial of access provision is conditional on a particular causal trigger, the effect of general exclusion clauses on specified extensions, and whether a disease provision listing SARs but not COVID-19 is capable of responding to a claim for BII arising from the COVID-19 pandemic.

In other cases, we are advising policyholders on the insurer’s right to void a policy on the grounds of misrepresentation and underinsurance and whether settlement offers can be challenged.

If you think you have a claim for BI and/or would like to check whether your insurer’s position can be challenged please do not hesitate to contact the BI team on the details below.

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