Business interruption cover covers businesses during periods where the business has a loss of income as a result of an unexpected event. The aim of the cover is to put the business back in the position that it would have been had the unexpected event not happened. Most BI cover relates to property damage, however the main question is whether the insurers would deal with interruption in relation to the virus.
Firstly, Every policy is different and must be considered against the recent complex court judgment to work out what the judgment means for each particular policy. Further, every insurance company has different requirement before you are able to put forward a claim. Thus, specific advice can only be provided once we have had a full review of your policy and any other supporting documentation.
Secondly, you will have to raise a claim and of the claim within a specific time period.
Thirdly, you will have to as a result of the pandemic. Insurance companies usually pay out for loss of profits, fixed costs, loan repayments and employee’s wages. However, this will entirely depend on your policy and your policy may even have a maximum amount that can be paid out. Therefore, to make a claim for BI you must have lost out on profits.
As mentioned above, there has been a recent complex court judgment in the Supreme Court in relation to Business Interruption cover. The financial conduct authority raised a claim against 6 insurance companies acting on the interests of policy holders. The case was brought by the FCA as a market test case as many insurance companies were not paying out for losses arising from interruption of the business due to the coronavirus pandemic.
The judgment addressed the following issues:
This decision will be legally binding on the 6 insurance companies who were involved in the case (Arch Insurance (UK) Ltd; Argenta Syndicate Management Ltd; Ecclesiastical Insurance Office Plc; MS Amlin Underwriting Ltd; Hiscox Insurance Company Ltd; QBE UK Ltd; Royal & Sun Alliance Insurance Plc; Zurich Insurance Plc) and it will provide guidance for interpreting similar wordings and claims.
There are still some greys areas but this judgment is welcomed and will hopefully give a boost to some companies who are struggling into the third lockdown. The judgment potentially will affect up to 370,000 firms holding 700 types of policies and result in up to £100m being paid out in Scotland to businesses.
If you require any advice on pursuing a business interruption claim with your insurer, reviewing your policy, advising you of the merits of your claim or dealing with any disputes that arise with your insurance company, please do not hesitate to contact our on 0141 375 1222.
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