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Fri 15th Jan 2021 - Supreme Court rejects insurers’ claims in landmark business insurance case
Supreme Court rejects insurers’ claims in landmark business insurance case: The UK Supreme Court has upheld the judgment on the Financial Conduct Authority’s (FCA) business interruption insurance test case. The ruling appears set to force insurers to pay out on disputed coronavirus business interruption claims potentially worth £1.2bn. In a judgment handed down on Friday (15 January), the court said it “substantially allows” the appeal by the FCA and campaign groups Hiscox Action Group and Hospitality Insurance Group Action. Richard Leedham, partner at Mishcon de Reya, which represents the Hiscox Action Group, said: “The judgment should be a massive boost to all businesses reeling from a third lockdown that can now demand their claims are paid. The hope and expectation of our clients is the claim adjustment process starts immediately and insurers will not continue to cause further distress by further unnecessary delay.” Hundreds of thousands of businesses – including those in the hospitality sector – that were forced to close or faced significant losses made claims on their business interruption insurance. But leading insurers disputed the claims arguing their policies did not cover the restrictions. This prompted the watchdog to bring a test case on behalf of policy-holders seeking legal clarity on the issue. High Court and Appeal Court judges had ruled largely in favour of the policyholders. Some businesses were thrown a lifeline in September when the High Court ruled claims should be paid in most cases where policies had pandemic or disease clauses. However, it also ruled losses arising from a general reduction in consumer demand and the government’s lockdown measures were said to be distinguishable and thus not covered. The Supreme Court case between the FCA and six insurance companies was heard in November after the regulator and the insurance companies sought to appeal aspects of the ruling. The Supreme Court was asked to rule on provisions in policies relating to disease clauses, prevention of access clauses and hybrid clauses. The Financial Ombudsman Service and courts in Scotland and Northern Ireland are expected to base their decisions on the Supreme Court’s ruling. 

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