The Consumer Lawyer

Business Interruption insurance landmark court ruling that should benefit consumers

The Royal Courts of Justice, London. The Law Courts, The Royal Courts of Justice houses the High Court and Court of Appeal of England and Wales.

Following the onset of the Covid-19 pandemic and then the lockdown, hundreds of thousands of small businesses took the natural step of turning to their insurers to cover them for the significant losses they were sustaining. However, most were met with a brick wall and a blanket response advising that they were simply not covered. Many of the insurance providers claimed that policies only covered business interruption caused by issues in the local area and others stated that policy holders must prove that Covid-19 cases occurred either within 25 miles, or one mile of a business premises for it to count as being directly affected.



Earlier in the year I reported that the financial regulator, the Financial Conduct Authority (FCA), was challenging insurers on whether they can wriggle out of business interruption insurance claims during the coronavirus pandemic, and that they were taking test cases to the High Court. The Court has today handed judgment in favour of the FCA, and therefore the policy holders. This landmark victory will impact on an estimated 370,000 small businesses who will have a collective claim of around £1.2 billion.


Whilst I do not generally comment on legal issues that affect businesses only, this is a victory that could, and indeed should, have a very big positive impact on consumers. Many consumers have had refunds denied for cancelled holidays, weddings and events, on the basis of traders citing that claims were refused due to them not being covered by their business interruption insurance and I now urge these traders to look after the consumer.  I should also add that those traders who have refused refunds due to not being covered by insurance, have been wrong, and have been breaking the law.


Now for the bad news; There is a strong chance that the insurers will appeal today’s court decision, which could see the ruling overturned.

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