As covered in my earlier article Does my business interruption insurance cover me for Covid-19 related losses?, the Financial Conduct Authority (FCA) took a test case all the way to the Supreme Court (Financial Conduct Authority v Arch Insurance (UK) Ltd & others  UKSC 1) in order to obtain some much needed clarity over whether various business interruption insurance policies provide cover for losses suffered as a result of the Covid-19 pandemic and its related government-imposed restrictions.
The FCA’s test case raised a number of complex issues (the combined judgment came to almost 300 pages), but the key take away points from the judgment which related to “non-damage business interruption” policy clauses (i.e. business interruption clauses which do not require there to have been physical damage in order to be triggered) were summarised in my earlier article.
Since the initial judgment was published, the Supreme Court has issued a further Court Order updating and amending the High Court’s original declarations in the FCA test case. The Supreme Court’s Order now sets out how each of the various sample insurance policy clauses considered in the FCA test case respond to the business-interruption-related losses arising from the Covid-19 pandemic. While the declarations are only directly applicable to the 21 sample policy clauses chosen for the FCA test case, the principles behind the Supreme Court’s judgment are likely to have far wider applicability.
The FCA itself has also updated its guidance for policyholders of business interruption insurance policies, including publishing guidance on its website designed to help policyholders navigate the Supreme Court’s declarations and its key conclusions.
Importantly, the FCA has reiterated its view that insurers should not include the period between 17 June 2020 and the final resolution of the test case (14 July 2021) when calculating the time limits in which policyholders have to bring any claims under insurance policies that were potentially affected by the FCA test case.
Equally (and as discussed in my article ‘Insurance claims – time to pay up?’ here), with insurers now required to pay insurance claims within a “reasonable” time, policyholders who have suffered additional losses as a result of their insurer’s late payment of a business interruption insurance claim could potentially be able to claim those additional losses back from their insurers, if they can show that the payment was not made within a “reasonable” time. Although it is likely that the Courts will consider that any delays in making payments while the FCA test case was ongoing were “reasonable”, now that the test case has concluded, any further delays could very well lead to potential claims against insurers for late payment.
As helpful as the Supreme Court’s declarations and the FCA’s updated guidance are, because each potential business interruption insurance claim will still be determined on its own specific facts and policy wordings (unless your policy is one of the 21 samples considered by the Supreme Court), there may still be some work needed to accurately apply the principles from the Supreme Court’s decision to the facts of your specific claim.