Hundreds of thousands of small businesses should hear in September whether their insurers are legally bound to pay out on business interruption policies in light of the Covid-19 pandemic.
The High Court recently began hearing a test case brought by the Financial Conduct Authority (FCA), the City regulator, against eight insurers, which will establish the legal meaning of 17 different policy wordings in business interruption policies.
The FCA believes the ruling will apply to around 50 insurers with some 370,000 policyholders. Many insurers have argued that business interruption insurance was never meant to cover businesses damaged by a pandemic such as Covid-19.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Instead, according to them, the insurance is meant to provide short-term help when a natural disaster, such as flooding, prevents a business from operating as normal.
However, small businesses believe their policies are framed more broadly than this, and that insurers should therefore be paying out on Covid-19-related claims.
The High Court will consider a range of issues, including the extent to which the pandemic counted as an instance of “denial of access” to business premises, whether Covid-19 is an “emergency” in insurers’ terms and whether businesses need to show they had the coronavirus on their premises or nearby.
The case also covers the question of how much insurers should pay, with some arguing that even if they are liable, policyholders might not have missed out on much income because of the closure of their business premises, given that the entire country was in lockdown. The FCA, however, is making the case that insurers should be paying out based on what businesses would have earned without Covid-19.
-
Is a mortgage in retirement always a bad idea?A mystery shopper exercise shows high street lenders are “shunning” retirees looking to take out a mortgage. Are they right to do so?
-
Three funds to consider as UK small caps trade at 30% discountUK small caps have been unloved for some time, but a shifting economic environment could give them a boost
-
'Rachel Reeves' plan to force pension funds into UK assets won't work'Opinion Hustling pension fund cash into British assets sounds like a good idea. It would be better to make Britain an attractive place to invest, says Matthew Lynn
-
Supersonic travel: How China could 'leapfrog' US and Europe's commercial aviation industryOpinion Innovation in commercial aviation has been stuck for 60 years. A commercial supersonic jet might be back on the market soon, but will China get there first?
-
How British businesses can tackle Trump's tariffsThe majority of British businesses are likely to take a hit from the chaos caused by Trump’s tariffs to reorder global trade. Companies in the firing line face some difficult decisions, says David Prosser
-
Trump wants to colonise Mars – will it happen?Donald Trump wants to plant the US flag on Mars. Could humans really live there?
-
Why are energy bills so expensive in the UK?Electricity bills in the UK are higher than in any comparable rich country. Some blame the net-zero zealotry of the government for that. What is really to blame for high energy bills?
-
Will Putin invade Europe? Why investors know Russia is a paper tigerOpinion Markets are right to ignore talk of Putin invading Europe, says Max King.
-
Why French far-right leader Marine Le Pen has been banned from running for officeMarine Le Pen, presidential candidate and leader of France's right-wing National Rally party, has been barred from standing by the country's judges.
-
Five years on: what did Covid cost us?We’re still counting the costs of the global coronavirus pandemic – and governments’ responses. What did we learn?
