COVID-19 Business Interruption FCA Test Case

July 2020

You may be aware that the Financial Conduct Authority is currently filing a ‘test case’ with the Courts in relation to disputed claims for non-damage business interruption cover, where the relevant coverage clause in the policy is unclear, or open to multiple interpretations. Daines Kapp made submissions to the FCA on behalf of policyholders providing examples where we believed there was insurance coverage but claims had been repudiated by the insurer. The FCA have included sixteen example coverage clause wordings from a range of insurers, to enable them to obtain a judgement affecting as many disputed claims as possible, even those with insurers not included in the case itself, but whose wordings are similar.
 
The decision in the case could, therefore, mean that your insurer has to review their decision on non-damage business interruption losses suffered by you under your commercial insurance.
 
For clarification, policies which include a list of ‘notifiable or communicable diseases’ that does not include Coronavirus or Covid-19 are NOT included in this test case and those policies do not provide cover for losses arising from the current pandemic closures. The vast majority of policies we have reviewed include a list of diseases
 
The case is expected to be heard in mid-July with a decision by the end of July, although some insurers may appeal the verdict, which will delay a final decision. The FCA have set up a web page related to the test case at https://www.fca.org.uk/firms/business-interruption-insurance which gives detailed information on the representative sample of wordings being used and the questions for determination. You may wish to sign-up for updates on the case using the link on this page and your insurer’s website may also give information on their position for policyholders.