Covid-19: Court’s significant ruling on business interruption test case

September 16, 2020
Michael Deery


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The tide has just turned strongly in favour of those with business interruption claims – if this affects you, then you are highly  recommended to act promptly:

The Problem

For many months now a large number of businesses and individuals across England and Wales have lived with the uncertainty as to the enforceability of non-damage business interruption cover for loss of profits/expenses which their insurers were resisting due to Covid 19 . We originally advised clients to await the Financial Conduct Authority’s (FCA) test cases in the High Court, who in July selected a cohort sample of some 20 policy wordings, around 700 types of policies used by various leading insurers, which were considered at an eight-day hearing.  Whereas many Insurers tried to argue that the policies in question, although explicitly providing cover for notifiable diseases, sought to allege that this did not cover coronavirus/pandemics.  

The Clarity

Yesterday 15/09/20 Lord Justice Flaux and Mr Justice Butchesiiting in the High Court handed down a detailed 162-page judgement predominantly in policyholders’ favour in this landmark business insurance case with some 370,000 firms affected. This is a comprehensive Judgement which will impact right across the business interruption insurance sector.

Insurers are now facing paying out hundreds of thousands to firms who had business interrupted by coronavirus and claims turned down,  following this landmark High Court ruling.

The Court looked at

  • Disease wordings – indemnity cover for business interruption, following the outbreak of notifiable disease within a specified area/premises.
  • Prevention of access/public authority wordings – cover where access to and/or use of the premises has been prevented as a result of government or public authority restrictions.
  • Combined/hybrid wording – where provisions may restrict the premises regarding notifiable diseases.
  • Trend clauses – the insured peril.
  • Causation of business interruptions loss.

Insurers tried to argue that the policies in question although explicitly providing cover for notifiable diseases,  did not cover coronavirus/pandemics.  Plainly Insurers will now very carefully reflect on the extensive judicial and regulatory clarity provided here, and the hard commercial reality of continuing to deny respective claims, and make a call on how to progress claims of the type that the Judgment says should be paid. 


In summary, the following  category of businesses who are recommended to revisit the validity of any claim include:

  • restaurants, cafes, bars
  • cinemas/ theatres
  • food retailers, pharmacies, those classified as ‘essential shops’
  • other shops categorised as not ‘essential shops’
  • professional service firms, accountancy, lawyers, construction and manufacturing etc
  • holiday accommodation businesses
  • schools, nurseries and places of worship, etc

This is a comprehensive Judgement which will impact right across the business interruption insurance sector for a large number of businesses and individuals, and whereas this missive is not all-embracing, it is highly recommended to revisit business interruption cover and the right to indemnity which this long-awaited and leading  Judgement now bolsters.


If you have any enquiry on this from a policyholder/claimant or defendant/insurer prospective, kindly contact Michael Deery 07881 382 599 in the first instance who will be happy to assist. Now is the time to strike as many  Insurers may be scrabbling to cap off the risk, given there is no guarantee of a successful appeal and/or avoiding paying out policyholders.