Health
Covid insurance test case heads to Supreme Court
By Kevin Peachey
Personal Finance Correspondent
Image copyrightGetty Images
A hotly contested case of insurance payments for small businesses that could not be traded due to a blockade to the Supreme Court on Monday.
Many companies have closed or faced significant losses and have claimed business interruption insurance.
However, many insurers disagreed with this claim, arguing that the policy was not intended to cover such unprecedented restrictions.
Judges of the Supreme Court will make a final decision after a hearing that is expected to last for four days.
The problem affects 370,000 people (mostly small businesses) and involves a potential payment of £ 1.2 billion.
A judge in the High Court has previously determined that insurers are in favor of having to pay policyholders for their choice of policy type. Some of these decisions are currently being appealed in the Supreme Court.
What’s wrong?
Thousands of companies were unable to operate during the first national blockade, for example because they could not enter the premises.
Image copyrightAnna SmartThat meant that some were out of business. Others, such as Anna and Robin Smart’s photo studios in Oxfordshire, have been forced to miniaturize, make staff redundant, or relocate.
Smarts moved the studio to the backyard and said the whole situation caused “great stress.”
They, like everyone else, asked the insurance company for compensation under a business interruption insurance policy. Some companies paid thousands of pounds a year for such compensation.
Some insurance companies refused to pay because they said the illness clause of the contract did not cover such a scenario.
What has happened so far?
The city’s oversight body, the Financial Conduct Authority, has brought in test cases in which eight insurance companies have agreed to participate in the procedure.
This went to the High Court and the judge decided that most, if not all, of the policies involved should be paid to provide a potential lifeline for many of these small businesses.
However, many still had to wait while the proceedings were swiftly advanced to the Supreme Court, the Supreme Court of England and Wales.
What is the Supreme Court looking at?
The High Court has considered 21 policy types as part of the test case and has appealed 13 decisions.
These will be discussed in a complex legal debate in the Supreme Court for four days.
Of these, the lower court said 11 cases should lead to payments-the decision is currently being appealed by the insurance company. The judge said the two should not be paid and are subject to FCA appeal.
For the two insurers, Zurich and Ecclesiology, the ruling was determined to be entirely in their favor, and the FCA decided not to appeal the findings.
The Supreme Court judge’s final decision provides authoritative guidance on other policies and, in some cases, similar policies that are not part of the case.
For example, financial ombudsman services and courts in Scotland and Northern Ireland are expected to use judgments to rule other similar cases.
When will the conclusion come out?
The Supreme Court will rule a few weeks after the hearing next week.
The FCA expects insurers to respond quickly to final decisions if the results mean that they need to.
The claims are primarily related to the old policy during the first UK blockade, as many companies have updated their annual policies since the first blockade began, including the Covid exclusion.
Related topics
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