In the first lockdown last year, many small businesses put through claims as part of their business interruption insurance policies for loss of earnings when they had to close.
However, many insurers refused to pay, arguing such unprecedented restrictions were not covered.
A test case was brought against insurers by the Financial Conduct Authority (FCA) and a selection of policy wordings were tested in court as to whether they should be considered a valid claim.
The court found in favour of the policy holders and covered issues such as disease clauses, whether business were denied access to the properties, and the timing of lost earnings.
The FCA has published a list of policies tested in this test case.
What does this mean for businesses?
This decision is good news for many businesses, however it very much depends on the wording used in your policy as to whether you will be able to claim.
If you believe that you are affected with regards to a previously rejected insurance claim you should:
- Act quickly – Notify your insurer without delay. Also contact your broker (if you have one) to discuss whether they think you may be able to claim or if they can assist for example with the calculation of your claim.
- Review your policy – Check for any exclusions and read the business interruption section (which is usually clearly marked) which should set out how you can make a claim.
- Keep records – Keep evidence of what you have submitted to your insurer and when.
If your insurer rejects your claim, they must provide reasons why they have made this decision. If you want to challenge the decision you may wish to seek advice or contact the Financial Ombudsman.
It is likely that, like the PPI scandal, there will be many claim management firms springing up who offer to handle your claim, for a (often large) percentage of the claim value. Businesses should consider carefully whether this approach is necessary, as you may have assistance from your broker or insurance advisor, as well as the FCA list (noted in this article) of policies tested.