Hundreds of businesses take on Hiscox over insurance claims

Hundreds of businesses take on Hiscox over insurance claims

The insurer is refusing to pay out on many of its business interruption insurance policies.

Insurance provider, Hiscox Ltd, is finding itself embroiled in a legal battle in relation to Covid-19 and business interruption insurance. Hundreds of businesses across the UK believe they have been wrongly denied business interruption claim pay-outs due to their business premises being forced to shut due to the spread of coronavirus.

These businesses, who are already struggling to keep afloat in the most challenging commercial environment in a hundred years, are arguing that Hiscox has an obligation to compensate policyholders with legitimate claims.

Business interruption policies typically pay up to £100,000 to cover the cost of keeping a business going if it is forced to close for reasons beyond its control.


What is the Hiscox business interruption dispute about?

Before coronavirus brought the whole world to a standstill, Hiscox sold business interruption insurance policies to companies, stating it would pay out when a business was forced to shut down owing to a notifiable disease.

The policy documents state that they will cover financial losses for businesses who are unable to use their premises following:

an occurrence of any human infectious or human contagious disease, an outbreak of which must be notified to the local authority”

However, many businesses who have taken out this policy believe they are eligible for compensation have found Hiscox deny their claim or drag their feet on the matter.

The insurance provider has stated this is down to the fact that the policies do not provide cover for business interruption as a result of the “general measures” taken by the Government in response to the pandemic. Many have argued this is ambiguous.

One disgruntled business owner, Paul Daly, is the owner of Roadtrip and The Workshop bars in Shoreditch, London. He paid £18,000 a year for his business interruption insurance policy with Hiscox, which he believed included cover for a Government-imposed shutdown during a pandemic.

Daly’s income has plunged to zero ever since the lockdown came into place on March 23rd. Speaking about his claim being turned down, he stated:

“People’s livelihoods are at stake here. I’m worried. It shouldn’t have to be into this when I’ve spent tens of thousands of pounds on insurance. It’s like someone came into my bar and bought a drink and then I don’t give it to them.”

The dispute has also caught the eye of the UK’s financial watchdog, the FCA. They reminded Business Interruption insurers – without singling out Hiscox – to compensate policyholders with legitimate claims. They stated:

“There are policies where it is clear that the firm has an obligation to pay out on a policy. For these policies, it is important that claims are assessed and settled quickly.

A key objective of the FCA is to ensure that financial pressures on policyholders are not exacerbated by slow payment, rather, such claims should be paid as soon as is possible”


What have Hiscox said about the dispute?

Hiscox responded to the dispute on April 22nd stating that it was simply following the wording in the policies. They released a statement saying that:

Core policy wordings do not provide cover for business interruption as a result of the general measures taken by the UK government in response to a pandemic.

They also added that the insurer’s policy was intended to cover incidents that occur only within a mile radius of the business, not across the whole country. They double-downed on this stating that business interruption policies across the industry were never intended to cover pandemic risks.

They did, however, add that they had around 10,000 companies who had purchased cover for business interruption who qualify for compensation. Hiscox stated it was actively settling claims for event cancellation and abandonment, media and entertainment and other industries including travel. They are expected to pay out £120m to settle claims if restrictions on travel and mass gatherings continue for six months.

A statement said:

A number of UK policyholders have disputed the application of their policy in relation to business interruption. Hiscox recognises these are extremely difficult times for businesses and is determined to help provide greater certainty for customers. As a priority it will therefore work with the UK insurance industry, its regulators and its customers to seek means of expediting resolution through the range of independent mechanisms available.

Many experts in the industry, however, are arguing that the terms are ambiguous and there is room for legal action if some claims are not paid out properly.

Other companies in the industry have differing coverage. Allianz and Aviva state they do not cover any diseases that are not named in their policies. Zurich has said its policies “generally” did not provide cover for global events like the Covid-19 pandemic. Axa and RSA say some of their policies may cover businesses which suffer a loss because of a coronavirus outbreak on their premises.


How can Smooth Commercial help you if you have been affected?

Smooth Commercial Law understand that these are unprecedented times for businesses up and down the country. We empathise with UK companies who are struggling to get the compensation they deserve from insurers who are fighting tooth and nail to not pay out on legitimate claims.

Smooth Commercial Law have a team of experts who have extensive experience in dealing with a whole manner of claims that arise from commercial disputes such as insurers failing to pay out.

We deal with financial bodies like the Financial Ombudsman, Financial Conduct Authority and Financial Services Compensation Scheme every day, and we understand how to navigate the obstacles in order to get you and your business the decision you want.

Should you have a claim against your insurer for failing to pay out on a business interruption loan policy, we can deal with your case and look to recover compensation. Once you get in touch, we will speak with you and advise whether you have a claim before you go ahead.

You can contact our experienced team by calling 0800 046 9976 or by emailing

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.