The coronavirus pandemic has hit small and medium businesses hard, with the Federation of Small Businesses predicting over 250,000 small businesses face collapse without additional support. That’s where many have turned to their business insurers for hope.
While no business owner could have predicted the outbreak of coronavirus, many felt secure in the knowledge that their insurance policies included Business Interruption Insurance that would pay out in the face of such a crisis.
However, many businesses turning to their insurers for payouts have seen their claims denied. In January 2021 a test case was brought to the UK’s Supreme Court to determine whether insurers were making the right decisions. In a blow to insurers, the court found largely in favour of claimants who had been denied pandemic-related payouts.
Affecting some 700 Business Interruption insurance policies, the ruling gives over 370,000 small businesses hope that they have a financial lifeline. With this ruling, claimants can challenge decisions made on existing claims, or submit new claims for losses they’ve suffered as a result of Covid-19.
Unfortunately, not all policies will cover losses related to the pandemic and not all policyholders will find themselves covered. As the Financial Conduct Authority has highlighted, ‘each policy must be considered against the detailed, “complex” judgement to work out what it means for any particular policy’. That means each specific policy must be reviewed thoroughly to determine the strength of any claim.
Here we examine what the process is for challenging a rejected Business Interruption Insurance Claim and what your chances of a successful, and fruitful resolution are.
What is the process for challenging a rejected Business Interruption Insurance Claim?
Each Business Interruption Policy is unique and depends upon how the courts have analysed the wording for many specific types of business. Following a Supreme Court ruling in January 2021, businesses who have had Business Interruption Claims rejected by their insurers are now in a position to challenge the decision.
However, the challenge for businesses comes from the interpretation of specific wording within their policies. As identified by the Courts, there are over 700 different Business Interruption Policies from over 60 insurers, all which differ in what they cover and when.
That means that before any claim is made to your insurer, it is essential that you understand exactly what your policy entitles you to.
Of course, it is important that claims are presented in the best possible way to ensure an effective and efficient claims process according to the detailed policy wordings considered by the courts. Our experts assess businesses losses so that as soon as liability is accepted, the claim can be processed as quickly as possible, and a payout received in the shortest possible time.
To progress, you first need to access your policy documents. If you engage a lawyer, they will handle this request with the broker or provider directly.
If your business has suffered losses as a result of the coronavirus pandemic now is the time to act and seek an expert policy review. If you have had a claim denied, or are yet to make a claim it is important that you put your best foot forward and have your policy reviewed by an expert insurance lawyer.
As an expert financial services lawyer I assess your policy and your circumstances in detail to determine the best course of action for you.
What are the chances of success for a Business Interruption Insurance Claim for coronavirus losses?
The chances of success for a Business Interruption Insurance Claim for coronavirus losses depends on two factors.
Firstly, success depends on the particular wording of your policy and what interpretation can be made from it. Each Business Interruption Policy is unique and the success of any claim depends upon how the courts have analysed the wording for many specific types of business. This makes it difficult to give any indication of success until your policy has been analysed.
The second success factor is how your claim is presented to your insurer. To achieve the maximum payout, in the shortest possible time a claim needs to be positioned in the best possible way, with clarity and confidence. An effective and efficient claims process is almost entirely dependent on how the claim is presented.
If you’ve been affected we urge you to get in touch to discuss your options and ensure any claim is made with the strongest possible chance of success.