Insurance firms must pay many small firms for Covid lockdown losses
Tens of thousands of small businesses are set to receive insurance payouts covering losses in the first national lockdown, following a court ruling. The Supreme Court ruled that insurers must pay out for coronavirus-related losses.
In the lockdown of last spring, many firms took out business interruption insurance policies to cover them for unexpected events that caused them to stop trading. But many insurers refused to pay, arguing only the most specialist policies had cover for such unprecedented restrictions.
It was agreed that a selection of policy wordings should be tested in court, setting the parameters for what would be considered a valid claim.
Payouts could help many small firms survive through the latest restrictions.
For some, it could provide the lifeline allowing them to trade beyond the coronavirus crisis.
The ruling could cost the insurance sector hundreds of millions of pounds.
Richard Leedham, who represented the Hiscox Action Group - on behalf of small businesses, said: "This is a landmark victory for a small group of businesses who took on a huge insurance player and have been fully vindicated.
"What is important now is that Hiscox accepts the Supreme Court's verdict and starts paying out to its policy holders, many of whom are in danger of going under".
Other insurers involved in the test case are Arch, Argenta, MS Amlin, QBE and RSA - but as many as 60 insurers sold similar products. They will now pay out on many, but not all, policies.
Huw Evans, director general of the Association of British Insurers, said: "All valid claims will be settled as soon as possible and in many cases the process of settling claims has begun.”
Posted on Jan 15, 2021.