As we approach “business as usual”, what losses can you claim?

A year has passed and the United Kingdom slowly starts to move forward with the easing of lockdown.  This is great news for businesses all around the country, but it cannot be forgotten that significant losses and irreversible damage has been caused as a result of the coronavirus pandemic, and sadly, more is yet to follow.

The coronavirus pandemic, we hope, is now slowly paving the way for us to resume some form of “normality” but where does that leave you and your business in respect of its losses?

Many have raised the question as to whether they can claim under business interruption insurance policies.

The Supreme Court recently handed down judgment in the test case of Financial Conduct Authority (FCA) v Arch Insurances Ltd and Others, which used sample policy wordings of a number of business interruption insurance policies.

The outcome was monumental and largely in favour of the FCA, benefiting many small and medium size businesses that held business interruption insurance and have suffered losses as a result of the measures taken by the UK Government during the pandemic.

The judgment allows insurers and policy holders to focus on the value of claims and calculations to determine quantum. Whilst this positively improves the right to claim under business interruption policies going forward, there are still a number of outstanding factors that can only be determined on a case by case basis.  The judgment allows the focus to be placed on the values of claims however, it is important to note that each policy will still need to be analysed and the clauses and wording checked with scrutiny in order to consider it on its own terms against the judgment that has been announced, and the facts of each case.

The good news is that the recent judgment has brought greater clarity and removes the hurdles to claims by policy holders, and opens the doors for assistance and smoother transactions when making a claim for losses as a result of the coronavirus pandemic.  The test case law will mean that the pay outs received in respect of valid claims will be higher than initially envisaged.

The Supreme Court judgment is likely to be welcomed by both policy holders and insurers.  The FCA are working with insurers to “rapidly conclude their claims processes” and in some cases, they have provided interim payments to policy holders that have been affected.

If you consider that you may need to make a claim under your business insurance policy, you should act sooner rather than later to (a) to check your policy wording and (b) notify your insurer following the procedure required under your insurance policy.  You must keep a careful note of your losses together with any evidence. It is always important to remember that the Courts and insurers will place great emphasis on policy holders to mitigate their losses and so at all times, business owners should do everything possible within their power to minimise losses.

It is inevitable that every insurance policy will be different, and every business will also be impacted in a different way as a result of the coronavirus pandemic.

If you are in doubt or wish to be advised on the terms of your insurance policy and your right to recover business losses, please do not hesitate to contact Kavita Rana of Edwards Duthie Shamash on 020 9514 9000.

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