On 15 September 2020, Judgment was handed down by the High Court in the test case for business interruption insurance policy cover when assessing the policy wording for claims relating to COVID-19; The Financial Conduct Authority v Arch & Ors. Brought by the regulator for the insurers, the FCA, the case provides insureds and insurers with guidance and principles to follow in reviewing and considering their own insurance cover by comparison to the 21 sample wordings considered by the Court.
The Judgment will be of keen interest to any companies impacted by COVID-19 and looking to their business interruption insurance policies to see if their loss of business is covered by the policy wording.
Whilst 21 different policy wordings were considered, they can be broadly categorised under (i) wording providing cover for business interruption from disease within a certain distance of the premises or (ii) cover for prevention of access to premises by the government (or some other body) as a result of an emergency/incident within a certain distance of the premises
Considering each of these in turn;
Disease wording
In summary, the High Court concluded that these clauses would be triggered by virtue of the business interruption being caused by there being cases of the disease in the policy area but not limited to outbreaks wholly within the area specified (the rather narrower view put forward by the insurers).
Prevention of access wording
Again, in very brief summary, the conclusion of the High Court was that these clauses were more restrictive than the disease specific wording. The Court decided that the wording of these policies were to provide cover for emergencies specific to the local area. Although whether or not cover is available will be fact specific to the local area, the action taken and dependant upon the specific wording of the policy.
The court considered a previous case on business interruption (Orient Express Hotels Ltd v Assicurazioni Generali SpA) which had previously been the hurdle for business interruption losses (narrowly construed). The High Court found that, had it been necessary, they would have decided that the Orient Express case had been incorrectly decided and would not have followed it.
Next Steps
If you or your company has been affected by COVID-19 and are seeking advice on your business interruption insurance policies, you can contact Anis Waiz and Thomas Halstead of our Banking & Finance, Dispute Resolution team.
Anis Waiz – 01869 222314 – awaiz@se-solicitors.co.uk
Thomas Halstead – 01869 222319 – thalstead@se-solicitors.co.uk
