Insurers must pay out for Covid claims – Ruling by Supreme Court
Retail NI has welcomed the decision by the Supreme Court that insurance companies must pay out to small traders.
Retail NI Chief Executive Glyn Roberts said “This is a welcome ruling for local small businesses and independent retailers who felt that insurance companies were avoiding their responsibility to pay out on premiums.
“Insurance companies must now insure that early payment is progressed to many thousands of struggling local businesses”.
Many firms took out business interruption insurance policies to cover them for unexpected events that caused them to stop trading but then found that insurance companies rejected claims for losses resulting from lockdowns.
A test case was brought to the Supreme Court by the Financial Conduct Authority (FCA), after many insurers refused to pay to cover Covid-19 business disruption in early 2020.
The ruling potentially means tens of thousands of businesses will now be able to make claims for disruption from the Covid-19 Pandemic and restrictions, estimated at a value of £1.2bn by the FCA.
The case was fast tracked to the Supreme Court. which decided that in most cases insurers should pay out. Judges also provided guidance for a further 700 policies, potentially affecting as many as 370,000 small businesses.
A key issue was whether so-called disease clauses in the policies mean that insurers should pay out to cover losses caused by businesses being ordered to shut under coronavirus restrictions. The court ruled that they should.
