The Supreme Court has backed the thousands of policy holders who have been refused pay-outs under business interruption insurance during Covid in a sensational judgement delivered this morning.
Five judges were tasked with considering an appeal brought by the FCA is what was a test case, and their 112-page verdict is now in, substantially allowing the FCA’s appeal, which was brought on behalf of policy holders following an earlier High Court judgement.
Thousands of small businesses including many estate agencies will now be due pay-outs after the judges ruled in policy holders’ favour on two key areas of argument.
These are that ‘disease clauses’ within business interruption policies can include Covid, and that agents who were told to close their branches by the government are due compensation.
The judgement also specifically mentions Hiscox, a major supplier to the property industry, in regard to the ‘business closure’ point.
“The Hiscox wordings provide cover only where business interruption loss is caused by the policyholder’s ‘inability to use’ the insured premises,” the judgement says.
“The [High] Court held that this means complete and not merely partial inability to use the premises.
“The Supreme Court agrees that inability rather than hindrance of use must be established but holds that this requirement may be satisfied where a policyholder is unable to use the premises for a discrete business activity or is unable to use a discrete part of the premises for its business activities.
“The Supreme Court interprets wording requiring “prevention of access” to the premises in a similar manner.”
Sheldon Mills, Executive Director, Consumers and Competition at the FCA (pictured), says: “We will be working with insurers to ensure that they now move quickly to pay claims that the judgment says should be paid, making interim payments wherever possible.
“Insurers should also communicate directly and quickly with policyholders who have made claims affected by the judgment to explain next steps.”