As covered in my earlier article Applying the Supreme Court’s ruling on Covid-19 related business interruption insurance claims, the Supreme Court’s decision in the test case brought by the Financial Conduct Authority (FCA) provided some much needed clarity over whether various business interruption insurance policies provided cover for losses suffered as a result of the Covid-19 pandemic and its related government-imposed restrictions.
But as helpful as the Supreme Court’s declarations (and the FCA’s updated guidance on the decision) in the test case are, many questions still remained over how the Courts would apply the principles from the Supreme Court’s decision to the facts of the claims before them.
The High Court recently had a chance to provide some further practical guidance when several high street giants (including bakery chain Greggs plc, Britain’s largest pub group Stonegate Pub Company Limited, and restaurant chain owner Various Eateries Trading Limited) brought claims against their insurers seeking hundreds of millions of pounds of compensation allegedly due under their business interruption insurance policies as a result of the Covid-19 pandemic.
Both the insurers and the policyholders claimed partial victories following the High Court decisions in these cases. From the policyholders’ perspective, they were successful in arguing that the pandemic was not a “single occurrence” that would be subject to a single limit on the amount that could be claimed for Covid-19 related business interruption losses. Instead, the policyholders would be entitled to a separate claim limit for each time the government had imposed a major restriction that affected the policyholders’ business.
From the insurers perspective, however, they were successful in arguing that any furlough support that had been received by the policyholders could be deducted from any insurance pay-outs due under the business interruption insurance policies, and that the definition of losses that were “caused” by the government’s restrictions should be narrowly interpreted.
However, this remains a very complex and developing area of law, and with hundreds of millions of pounds at stake, it is perhaps not surprising that the High Court’s decisions have been appealed to the Court of Appeal. These arguments are therefore still far from settled.
This article is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from taking any action as a result of the contents of this article.