Covid-19 Business Interruption Claims

Aston Lark has been heavily involved in the subject of Covid-19 and Business Interruption insurance claims since February 2020. On behalf of our affected clients, we have been working with the Financial Conduct Authority (FCA), the Financial Ombudsman Service (FOS) and their legal counsel, BIBA (British Insurance Brokers’ Association), numerous legal firms and insurers all in an attempt to obtain resolution where possible.

Back in March 2020, Aston Lark identified that whilst no insurer ever intended to cover an epidemic or pandemic event such as Covid-19, there were a minority of policy wordings which were less than clear on the matter, opening the door to further conversations.

The FCA Test Case

These further conversations ultimately resulted in the FCA announcing that they planned to take the matter to the High Court to seek clarification.

From the beginning of the Test Case, the FCA was very clear on which questions they wanted determination on (i.e. policies that the FCA did not believe were clear enough on the matter of Covid-19). In summary, these were those policies that:

  1. included a Disease clause that (i) did not rely on a specific list of insurable diseases (of which Covid-19 would not be listed) and if so, (ii) included a radius provision (whereby an occurrence of Covid-19 did not have to occur at the premises) and/or;
  2. included a Non-Damage Denial or Prevention of Access type clause.

This therefore immediately excluded policies from the Test Case that contained clauses that:

  1. relied purely on damage to occur (i.e. did not include a Non-Damage type provision) and/or;
  2. included a specific list of insurable diseases
  3. did not include a specific list of insurable diseases although did not also contain a radius provision.
The Outcome

The matter went to the High Court first and then on to the Supreme Court, who ultimately and broadly speaking found in favour of policyholders on ‘Disease’, but against on ‘Prevention of Access’ in relation to the impact of the nationwide restrictions following Covid-19.

It’s important to note that in the vast majority of situations, insurers were rightly so, extremely clear on whether their policy responded to Covid-19 or not and that even where cover was found to ultimately respond, this was inadvertent (i.e. not what insurers had at all intended to happen).

Aston Lark

Understanding the stress and challenge for our clients during this period, our aim has always been to keep you informed on key developments throughout and to support you through direct contact, via LinkedIn and Twitter, and via our website.

Where clients have a valid claim, we are working hard with each to reach resolution at the earliest.

Other support is available via our ‘Road To Recovery’ toolkit which provides advice, templates, checklists and access to further free resources all with a view to supporting our clients and their staff during these difficult times.

Access to our entire library of guidance notes on Covid-19 is available in our Coronavirus Resource Library.

For full details of the FCA’s updates on their Test Case, please see here.