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Business Interruption Insurance Guide: Do I have a Claim?

The Supreme Court handed down its ruling in the FCA test case on business interruption insurance against six insurers. If you are an affected business, you should seek legal advice as soon as possible and our specialist financial services litigation team can be instructed to assist.

Does your insurance policy provide coverage for business interruption as a result of the pandemic? The quickest way to find out is to send our Business Interruption Insurance solicitors your policy and we will let you know whether you have a claim. If you have a claim, we will offer you a no win no fee agreement.

If you are a policyholder and your insurer is refusing to pay out for a business interruption claim, seek legal advice from our specialist BII claim solicitors immediately as you may have a litigation claim to seek financial redress.

Is my company entitled to Business Interruption insurance?

Following the Supreme Court ruling, policyholders can expect to hear from their insurers. Each policy will need to be considered against the judgment and specific advice can be provided by this firm once we have been instructed to review your policy documents and we can be instructed on a damages based agreement.

The FCA believes and the Supreme Court has held that insurers should be liable for paying out for business interruption claims related to the coronavirus pandemic and the subsequent government lockdown restrictions placed on UK businesses.

There are policies where it is clear that the insurer has an obligation to pay out on a policy. For these policies, it is incumbent on the insurer to assess and settle these claims quickly. Financial pressures on policyholders should not be exacerbated by slow payment, rather, such claims should be paid as soon as possible.

Business Interruption Insurance Step-by-Step Guide

To assess whether you have a claim, follow our 6 steps below:

1. Does your policy include business interruption insurance?

Check your policy schedule. Read this in conjunction with the policy booklet provided by your insurer. It will state whether you have cover, the limit of indemnity. It is also important to check the period of coverage.

Usually the statement will contain wording like:

‘The insurance covers loss resulting from interruption of or interference with the business carried on by you at the premises…’

If you are unsure, send your policy documents to our BI claim solicitors and we will tell you whether you are covered.

2. Check your policy period

You need to ensure that the insurance policy was in force when the financial loss as a result of the pandemic i.e. for example the lockdown occurred.

The policy period (usually covering the period of 1 year and renewed annually) will likely be in the schedule or in a document called Insurance Product Information Document (IPID).

3. Does your policy cover non-damage losses?

Policies that are only limited to losses in relation to physical damage (such as fire) will not respond to a business interruption claims brought about as a result of the pandemic.

Check your policy wording for a clause entitled “non-damage”. This clause will usually contain wording like “disease” and “prevention of access”. Your policy may have a number of clauses for “non-damage”, and depending on the agreement, you would need one to respond in order to have a legitimate business interruption claim.

An example of a disease clause is:

‘We shall indemnify You in respect of interruption or interference with the Business during the Indemnity Period following any … occurrence of a Notifiable Disease (defined as illness sustained by any person resulting from any human infectious or human contagious disease an outbreak of which the competent local authority has stipulated shall be notified to them) within a radius of 25 miles of the Premises.’

An example of a prevention of access clause is:

‘loss … resulting from … Prevention of access to the Premises due to the actions or advice of a government or local authority due to an emergency which is likely to endanger life or property.’

An example of a hybrid clause is:

‘loss as a result of closure or restrictions placed on the Premises as a result of a notifiable human disease manifesting itself within a radius of 1 mile of the Premises.’

4. Is your insurer a party to the FCA’s test case?

Check your policy schedule to find the name of your insurer or underwriter. This may differ from the broker involved in the sale of the policy.

The following insurers were party to the test case and the ruling is binding upon them:

5. Is your policy affected by the test case sample?

Your insurer may have written to you stating whether it considers your policy may be affected by the outcome of the test case.

The FCA has provided a list of business interruption insurance policies for which claims may be affected by the test case.

6. Send your policy to our solicitors for a free review

Even if your insurer has written to you stating that they believe your policy does not provide you coverage, send us your policy for our review for free.

If you think you have a case, get in touch with our team of business interruption lawyers. We can assist you to understand the merits of your insurance claim and advise you on the best way to obtain fair compensation. Following our review, we may offer to take on your case on a no win no fee basis such as a Damages Based Agreement (DBA).

Have you received a business interruption full and final settlement offer from your insurer?

The FCA has stated that for affected claims where full and final settlements have been agreed, insurers should review the information provided to customers, to ensure that it was clear, fair and not misleading. Insurers should have informed policyholders about the test case and its implications when an offer to settle a potentially affected claim was made.

Insurers are being invited to contact affected customers and ensure that all valid claims are identified and that any necessary adjustments are made to any settlement offers (including full and final offers) that were made but not accepted by customers prior to 15 January 2021. Any residual payments should be made to customers accordingly.

If you require advice on your rights in respect of a business interruption claim with your insurers, or on a settlement offer, get in contact with our team for legal advice or a second opinion.

Why use a solicitor instead of a broker to submit your BII Claim?

Our Business Interruption Insurance Claim Solicitors add value by optimising the value of the claim. There may be heads of claim which have been missed or not considered by a non-lawyer such as a broker. It is important to instruct specialist lawyers to present your claim in a way that makes it easy for the insurer to accept and less likely to refuse.

If the insurer refuses any part of the claim, a business will also need a lawyer to pursue litigation, which a broker cannot do. It is very important to consider litigation at the outset when seeking to negotiate a good settlement. Our litigation lawyers are experienced in settlement negotiations to get an optimum award for our clients.

Instruct our Business Interruption Litigation Lawyers on a DBA

​We​ ensure that we provide the best possible outcome for our clients by conducting in depth investigation and research into the realistic prospects of a case before selecting the appropriate course of action in order to reduce time and expense. Liability for costs is always an issue in litigation and based on our extensive litigation experience we provide our clients with as much strategic, practical as well as carefully considered legal advice in order to ensure minimum risk in respect of costs. Where appropriate we encourage the use of alternative dispute resolution (such as mediation and without prejudice negotiation) and our lawyer’s negotiation skills are first class. If early settlement at advantageous terms is not possible, we are extremely experienced and capable at navigating our clients through the litigation process.

A damages-based agreement is a contingency fee agreement agreed by a solicitor and a client which provides that a client will make a payment to the representative if the client obtains “a specified financial benefit” (usually damages paid by the losing side or via a settlement sum extracted). The amount of the payment will be determined as a percentage of the compensation received by the client (which will be set out in the DBA and agreed with the client in advance). If the client is unsuccessful in their litigation case, the solicitor will not be paid for the work done under the DBA.

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Our litigators deliver advanced legal strategies.

We analyse and work out the legal merits of running your case to trial. We calculate and advise on legal risk factors and the litigation rules in England & Wales. We factor in your risk-appetite, costs sensitivity and determination. We plan the best possible result. We deliver strategic legal advice at your first meeting.

Want your case assessed? Just fill out our simple enquiry form; it goes immediately to our litigation team in Middle Temple, London. Or call our London litigation lawyers on ☎ 02071830529 (9-6 GMT, M-F).