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Victory (of sorts) for business insurance policyholders after High Court judgement

The FCA, which brought the case, says estate agents and other businesses which have struggled to move forward Covid claims with their insurer now have greater clarity on whether they are likely to get a payout.

Nigel Lewis

business insurance

The High Court has just handed down its judgement on the Business Interruption insurance test case and to a significant extent it’s good news for some of the estate agents and other property industry businesses who had made claims for lost income following the Covid lockdown.

A statement from the FCA says the victory has removed the need for policyholders to resolve many key issues of contractual uncertainty and causation individually with their insurers, and helped speed up the process of making a claim.

Chris Woolard FCA“Today’s judgement is a significant step in resolving the uncertainty being faced by policyholders,” says Christopher Woolard, Interim Chief Executive of the FCA.

Following complicated legal arguments over many weeks, the court found in favour of the arguments put forward by the FCA on the majority of key issues of contractual uncertainty, which had been made to seek clarity for as many policyholders and insurers as possible.

The FCA did this by selecting a representative sample of policy wordings issued by eight policy holders including Hiscox, one of the best known and widely-used insurance firms within the property industry.


The 150-page judgement falls into three categories and should be read carefully before agents reach for the fizz. These are ‘disease wordings’, which the court said would provide cover but are not common in Hiscox policies. The other is ‘prevention of access’ or ‘public authority’ policy wordings which under much fewer circumstances will provide cover, the court said. The third type is ‘hybrid wordings’ which are also found in Hiscox policies.

But the judgement says this will depend on the detailed wording of each clause and how the business was affected by the Government response to the pandemic.

This will include, for example, whether the business was subject to a mandatory closure order and whether the business was ordered to close completely.

“Each policy needs to be considered against the detailed judgement to work out what it means for that policy,” the FCA says. “Policyholders with affected claims can expect to hear from their insurer within the next seven days.”

Read a full and detailed legal break-down of the judgement by specialist firm Herbert Smith Freehills.

Mark HaywardMark Hayward, Chief Executive, NAEA Propertymark says: “Today’s result is welcome news for those who have been financially disadvantaged through no fault of their own and brings much needed clarity to policyholders and businesses suffering from financial strain due to the COVID-19 pandemic. It is important that each policy is now considered rapidly as a number of livelihoods depend on this.”

September 15, 2020

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