Covid-19 business interruption insurance claims

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Chambers UK
Commercial Dispute Resolution

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The coronavirus pandemic and lockdown measures have resulted in significant numbers of UK businesses having temporarily to close down or drastically reduce their operations. This has caused considerable loss of income and other damage.

We represent businesses that are claiming under their business interruption (BI) insurance policies for losses arising from the coronavirus pandemic. Many businesses across the country are finding that their insurers are either failing to confirm that losses are covered under their BI policy or have declined cover completely (and in some cases are stalling or even failing to respond to enquiries).

A test case against insurers brought in the High Court by the regulator, the Financial Conduct Authority (FCA), with the intention of resolving some key contractual uncertainties and ‘causation’ issues, has led to the court making declarations on the application and interpretation of sample wordings. That decision was appealed to the Supreme Court which handed down its landmark ruling in favour of policyholders on 15 January 2021.

Although the judgment is largely welcome news for policyholders, it has the following limitations:

  • only 12 sample wordings issued by six insurers were held to provide cover (out of 21 sample wordings issued by eight insurers tested in the original High Court case). As more than 60 insurers have provided BI insurance policies to UK businesses under an estimated 700 types of business interruption insurance, there will be significant variations to the samples across these policies;
  • where there is not an exact match for tested wording, it is highly likely that insurers will contest cover, making legal distinctions with which most businesses are not equipped to argue without taking legal advice;
  • the test case was never intended to encompass all possible disputes and does not determine individual claims;
  • various wordings were not specifically appealed to the Supreme Court. The Supreme Court adopted a fundamentally different approach to the High Court, and this has created some uncertainty where it appears that the Supreme Court might have interpreted those unappealed wordings differently, had they been appealed, and therefore whether those wordings ought now to provide cover or not;
  • the test case only deals with non-damage wordings (ie those not requiring physical damage) and only attempts to resolve limited questions relating to extensions of coverage for ‘disease’ and ‘denial of access’ as well as the effect of the ‘trends clause’ on quantum as a result of causation.

At Penningtons Manches Cooper, we are currently helping our clients to organise group action litigation claims. These clients are typically businesses and organisations within the education, arts, hospitality, retail and leisure, real estate, social housing, life sciences and motorsports sectors.

We are organising claims so as to meet the limitations of the test case and pursue those cases that would otherwise fall through the cracks.

It is intended that the group actions will be fully funded in order to avoid any upfront costs to our clients and will be led by our specialist business interruption insurance and group action lawyers, drawing on our extensive expertise within these business sectors.

To express your interest in joining the groups, please click here. Those with larger claims who are interested in being represented individually and outside the groups can contact us separately at

Please note that joining a group does not automatically mean you have a valid claim but comprehensive advice will be provided in due course.         

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Penningtons Manches Cooper LLP

Penningtons Manches Cooper LLP is a limited liability partnership registered in England and Wales with registered number OC311575 and is authorised and regulated by the Solicitors Regulation Authority under number 419867.

Penningtons Manches Cooper LLP