Theatres told they cannot get insurance payouts for business interruption during parts of the pandemic were given a boost yesterday when the UK Supreme Court rejected the insurers' claims.
The Supreme Court rejected an appeal by insurers in favour of arguments in a Financial Conduct Authority test case against half a dozen big insurance companies. Insurers had appealed against an autumn High Court ruling that they should accept claims.
In some cases insurers had suggested that because the early stages of the lockdown were unofficial rather than government-ordered, they weren’t under an obligation to pay out for that period.
They also claimed business interruption policies were not intended to cover enforced and long-term closures under government regulations, but more usual matters such as temporary closure due to physical damage.
The FCA says the court has now removed “many of the roadblocks” that led insurers to dismiss claims. Almost 400,000 business are said to be affected, with claims totalling more than £1.2 billion.
The court ruling will force insurers to pay out under a range of around 700 policy wordings issued by around 60 insurers.
The Supreme Court ruled in favour of several other arguments, which will result in more policyholders receiving payments, and in some cases higher payments.
The ruling generally obliges insurers to return claimants to what their financial position would have been if the pandemic hadn’t happened – as it does for more mundane claims - rather than allowing some to suggest that early in the pandemic, audiences had stayed at home and that should be the financial starting point for claims.
The full FCA background here