Insurers will not be bankrupts, if you were worried , don’t be

According to the FCA press release:

The Court found in favour of the arguments advanced for policyholders by the FCA on the majority of the key issues. 

Many policyholders whose businesses were affected by the Covid-19 pandemic suffered significant losses, resulting in large numbers of claims under business interruption (BI) policies.

Most policies are focused on property damage and only have basic cover for BI as a consequence of property damage. But some policies also cover for BI from other causes, in particular infectious or notifiable diseases (‘disease clauses’) and non-damage denial of access and public authority closures or restrictions (‘denial of access clauses’). In some cases, insurers have accepted liability under these policies. In other cases, insurers have disputed liability while policyholders considered that it existed, leading to widespread concern about the lack of clarity and certainty. 

The judgment says that most, but not all, of the disease clauses in the sample provide cover.  It also says that certain denial of access clauses in the sample provide cover, but this depends on the detailed wording of the clause and how the business was affected by the Government response to the pandemic, including for example whether the business was subject to a mandatory closure order and whether the business was ordered to close completely.

The test case has removed the need for policyholders to resolve a number of the key issues individually with their insurers. It enabled them to benefit from the expert legal team assembled by the FCA, providing a comparatively quick and cost-effective solution to the legal uncertainty in the business interruption insurance market.

Good job done by the FCA team, while good job done by the insurers.

Why insurers made a good job? they will claim to the government that those policies were not designed to bring them into bankruptcy, and they will request and get compensation, where needed. Therefore, if you were worried, don’t be, most probably, we will pay for it, it will still come from your pocket. When the system is smarter than us, it may be…

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