Covid-19 Insurance Guideline for Businesses

The Supreme Court has thrown a lifeline to businesses that have suffered from the Covid-19 pandemic in its decision on 15 January 2021. In the test case of FCA v Arch, the UK’s highest court allowed the appeal of the FCA and ruled against the insurers on key points in the interpretation of business interruption cover. The case was brought by the FCA with the voluntary participation of a number of insurers. The intention was to enable the court to provide some clarity on the law, and so that there would be consistency in the approach taken on interpretation.

Lord Briggs said that the case put forward by the insurers would mean that the business interruption protection “was in reality illusory” and contrary to the spirit and intention of the policies. The FCA thinks that some 370,000 policyholders holding 700 types of policies from 60 different insurers are expected to benefit from the decision. It is estimated to cost insurers £1.2 bn in payouts. In a time of uncertainty and concerns with cash flow, especially for small businesses, the decision will hopefully bring welcome relief to those whose business has suffered. Unfortunately, the case comes too late for the many who have already lost their livelihood across a range of sectors, especially in retail and hospitality.

If your business has been hit by closure and interruption due to the pandemic and you have an insurance policy with business interruption cover, contact your broker or insurer immediately for advice.  It is also anticipated that there will be litigation in the months ahead for additional losses due to delay in payment and wrongful rejection of claims. For a fuller report of the case published by the FCA, see

The information contained in this article provides a general overview of the current position in relation to the subject matter.  It does not constitute legal advice and should not be relied upon in relation to any specific legal problem.  If you require advice and assistance please contact Brendan Pang at Stokes Partners.