High Court rules on COVID-19 insurance test case

In a welcome development for thousands of small businesses, the High Court has ruled that losses arising from the COVID-19 pandemic are covered by certain business interruption insurance policies.

Many businesses have claimed on their business interruption policies in the wake of the pandemic, but in refusing to pay out on these claims, insurers have argued that the policies were not meant to cover such a situation.

The Financial Conduct Authority (FCA) launched a test case on behalf of policyholders, arguing that policy clauses dealing with infectious or notifiable diseases, or non-damage denial of access and public authority closures or restrictions, provided cover for losses resulting from the pandemic.

The case was brought ‘in order to resolve the lack of clarity and certainty that existed for many policyholders making business interruption claims and the wider market’.

The Court considered 21 sample policy clauses from eight insurers, submitted by the FCA. It concluded that most, but not all, of the disease clauses provided cover. It also ruled that the denial of access clauses provided cover in some cases, but this will depend on the wording of the clause and exactly how the business was affected by the government’s response to the pandemic.

The FCA estimates that around 370,000 policyholders could be affected by the Court’s ruling.

Some of the insurers have obtained a ‘leapfrog’ certificate allowing them to apply directly to the Supreme Court (leapfrogging the Court of Appeal), for permission to appeal. If permission is granted it remains to be seen what view the Supreme Court will take. In the meantime, the parties are continuing to have discussions to see if a resolution can be agreed.

Further information about the decision can be found at

Our Business Law team can advise you on a wide range of areas relating to dealing with the impact of the COVID-19 pandemic on your business, or on the cover afforded to you under an insurance policy. Please click here to contact a member of the team today.

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