Is your Business Interruption Insurance fit for purpose?

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BPE John Carter

John Carter, Senior Associate in BPE’s Litigation team, considers the recent Supreme Court ruling regarding business interruption insurance, implications for business owners and what businesses should do if they feel their insurance is not fit for purpose.

Almost all businesses will have insurance in place to protect against a variety of everyday risks from fire and theft to public liability.  Many will also have business interruption insurance to protect their income should the unexpected happen.

During the coronavirus pandemic, many policyholders have suffered significant financial losses and have therefore tried to claim on their business interruption policies.  Some insurers however have disputed liability and rejected claims, on various grounds, causing concern over the lack of clarity in this area.

The Supreme Court has recently considered the position in a test case which included multiple insurers and the Financial Conduct Authority. The subsequent ruling of the Supreme Court has resulted in insurers being forced to reconsider claims in this area where cover has previously been declined.

The decision is considered to be a significant victory for the insured businesses as it widened and clarified the interpretation of business interruption insurance policies to the benefit of the policy holder, particularly in the areas of disease and prevention of access.  This is positive news for many businesses who have been forced to close due to Covid-19 regulations.

We are currently working with a number of businesses who had originally been declined cover on their business interruption insurance. If you are facing this situation, a simple initial review of your policy will allow us to determine whether there is any scope to dispute the position with the insurer. This initial review is completed free of charge and is a relatively quick process to identify whether or not the policy should potentially have paid out based on your individual circumstances and the policy you bought.

Additionally, there are certain key sectors where business may not have been advised on the correct policies to hold.  If your business doesn’t have the correct cover or you were not advised by your broker to take out a policy which was comprehensive enough to cover the effects of Covid-19, we can also assess this and support you as to whether you may be able to claim against your insurance broker for negligence.  Businesses particularly likely to be affected in this scenario include hotels, holiday camps, restaurants, catering contractors and even leisure and retail operations.

If you have had a business interruption insurance claim rejected or have concerns about your cover or the policy you were advised to take out, then please contact John Carter at john.carter@bpe.co.uk or call 01242 248243 or contact another member of the BPE Litigation team.

Full details of the team and the ways we can support you can be found at www.bpe.co.uk/services/team/litigation/

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