The Supreme Court has rules in favour of SME business that have been shunned by insurance providers over business interruption insurance claims having been rejected last year. The Financial Conduct Authority (FCA) brought the case forward with the support of eight insurance companies last summer. When we last wrote about this, we advised businesses not to get pushed away by business interruption policies, as businesses were struggling to secure payouts, due to delayed and refused payments, businesses have struggled financially after being dependent on revenue from thousands of customers.
The legal process was fast-tracked to the highest court in England and Wales which rejected the insurers’ arguments and said it had “substantially allowed” the appeal brought by the FCA and an action group to clarify the position.
The case, brought about after last summer’s lockdown in the UK, causing many businesses to close and turn to make claims on their business interruption policies, only to be turned down, due to insurance firms claiming that Coronavirus isn’t covered in their policies.
Many small businesses, such as Jump Xtreme, felt let down, as the policies clearly stated they will pay when the interruption to the business was “due to restrictions imposed by a public authority following an occurrence of a notifiable human disease”. Due to delayed and refused payments, businesses have struggled financially after being dependent on revenue from thousands of customers.
Sheldon Mills, from the FCA, which brought the case on behalf of policyholders, said: “Coronavirus is causing substantial loss and distress to businesses and many are under immense financial strain to stay afloat. Today’s judgement decisively removes many of the roadblocks to claims by policyholders.”
We spoke to Jump Xtreme last year about their experience, their class action group and subsequent progress to help our businesses, introducers and suppliers to cover themselves against situations like this, with help and advice on what to do if this situation does occur. This was when Jump Xtreme started a campaign to make insurers honour a clear contractual obligation, setting up QIC Action Group.
“The QIC Action Group is seeking to challenge Business Interruption Insurance claim denials relating to policies issued by QIC Europe Ltd (Europe) and its agent, Eaton Gate MGU Ltd.”
As we now know, the Supreme Court found largely in favour of small firms receiving payments from business interruption insurance policies.
For some businesses it could provide a lifeline, allowing them to trade beyond the coronavirus crisis.
Johnson Reed Managing Director, Mark Johnson, commented “This very welcome news will help many businesses across sectors, including those suppliers and clients that we support. Businesses take out these policies in good faith to protect themselves from unfortunate and unforeseen circumstances and should be given the protection they have paid for. We are thrilled that struggling businesses will be able to make their valid claims to give them a lifeline, re-invest and look to the future. I imagine that more fighting is to be done to secure these claims, however, stay strong and keep pushing, trade will come back.”
