Insurers decision to appeal BI case met with disgust

Business Interruption Claims

Insurers decision to appeal business interruption ruling met with disgust

The insurance industry has not covered itself in glory during the business interruption scandal, according to those defending UK businesses.

The decision of insurers to appeal a High Court ruling which went in favour of struggling UK businesses has been called “disgraceful” by those fighting for businesses. 

Insurers have appealed a September High Court case which stated that the majority of UK businesses were entitled to claim against their Business Interruption policy if they had been forced to close due to COVID-19.

The High Court has ruled that this compensation should return the businesses to the position they would have been in had the pandemic never happened.

A 162-page ruling was handed down on Tuesday 15th September as part of a “test” case which was brought forward by the FCA against eight insurance firms, including Hiscox and QBE. The High Court was provided a sample of 21 policy wordings which the FCA said covered the majority of key issues that were in dispute. The judgement ruled that most, but not all, of the “disease” clauses provided cover for the pandemic.

Last week, the High Court granted “leapfrog” certificates for an appeal to the Supreme Court to the Financial Conduct Authority (FCA), and the insurers:

  • Arch Insurance
  • Argenta Syndicate Management
  • MS Amlin Underwriting
  • Hiscox Insurance Company
  • QBE
  • Royal & Sun Alliance

Meanwhile, Ecclesiastical Insurance Office withdrew its application before the hearing. The court also rejected an application from QIC Europe to become a party to the test case in order to bring an appeal.


Many more months of uncertainty for UK businesses?

Those representing many of the UK businesses expressed their disgust at the appeal from the insurers. They stated:

Rather than agreeing to abide by the court’s judgment and now pay claims, it is disgraceful that insurers continue to drag their feet and watch more and more of their own policyholders go to the wall.

The action of the Insurers shows exactly why there is a need for policyholders to join forces and take action together.

An appeal could now mean many more months of uncertainty for UK businesses who have already had a torrid year. It is not an over exaggeration to suggest that the decision to appeal, and therefore prolong court proceedings, will directly force many companies to close their doors for good as they wait on insurance payments.

Meanwhile, the FCA have said it would press on with the application to appeal “while continuing discussions with insurers and action groups to find a solution that avoids the need for appeal and enables pay-outs on eligible claims as quickly as possible”.


What is the Business Interruption Claims dispute over?

Before COVID-19 brought the business world to a grinding halt, insurers sold companies business interruption insurance policies. The idea of these policies is that they pay out when a business is forced to shut down owing to a disaster which is out of their hands. This disaster could be a fire, a flood, or it could be a global pandemic.

An issue was brought to light when one such insurer, Hiscox, refused to pay out on many business interruption policies. Their 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, Hiscox and other insurers argued that the policy does not provide cover for business interruption as a result of “general measures” taken by the Government in response to the pandemic.

Insurers also argued there would have to be a disease in the company’s “vicinity” for the policy to pay out. However, the FCA argued:

An occurrence of COVID-19 within at least the same city, town or village or other development is always likely to be within the Vicinity; and in any case the area involved remains relatively wide.

One of the first cases that brought the issue to light was that of Paul Daly back in April 2020. The disgruntled business owner runs Roadtrip and The Workshop bars in Shoreditch, London. He pays £18,000 a year for his business interruption insurance policy with Hiscox. Since the lockdown, his income has been decimated, and his claim for business interruption turned down. Back in April, he said of the matter:

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 High Court ruled on September 15th 2020 that the majority of businesses who held business interruption insurance policies and were forced to close due to the COVID-19 pandemic are entitled to compensation from the insurers, subject to the limits of their policy.


How can you claim business interruption compensation?

Smooth Commercial Law have a finger on the pulse of the current business interruption court case. Should you have a current business interruption claim against your insurer with us, we will keep you updated through every stage.

Claiming business interruption compensation through business insurance could be the only hope of survival for many UK business owners. Having said this, the wording of the insurance policies is often very complex and sometimes unique to each business.

If you believe you are entitled to business interruption compensation and your insurer isn’t paying out, our expert solicitors are able to go through your policy carefully to determine whether you may be able to claim.

If we believe you are eligible and your insurer disagrees, our team can calculate your potential losses and challenge the insurer for you. Our expertise with working with insurance companies, the FCA and the FSCS means that we can present your claim in a way that is dealt with promptly and efficiently.

Our legal team come from a financial services and compliance background. We are regulated and authorised by the Solicitors Regulation. 

If you would like to speak to one of our Business Interruption Claim Solicitors, you can do by calling 0800 046 9976 or by completing an enquiry form.

You can also contact Smooth Commercial Law Directors via email:

Scott Birchall -

Paul McKittrick -


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.