SMEs to receive pay-outs following interruption insurance decision
Small businesses that struggled during the country’s first lockdown will receive insurance pay-outs from their business interruption policies following a Supreme Court decision.
A number of insurers initially refused to pay small businesses on their policies because they say that only their most specialist policies had cover in unprecedented circumstances such as the COVID-19 pandemic.
However, the Supreme Court rejected that argument, meaning businesses will be able to claim on their policies to recover lost earnings.
Commenting on the decision in favour of policyholders in the Financial Conduct Authority’s (FCA) business interruption insurance test case, Federation of Small Businesses (FSB) national chair Mike Cherry said today’s judgement is a big victory.
“It cements the high court’s decision to grant businesses left on the brink the insurance pay-outs they are rightfully owed. For many, it has been a long and difficult road to get to this stage so this will bring clarity and hope to the thousands of firms which have been left in financial limbo for almost a year,” Mr Cherry said.
“While this is good news, and while the law has to follow procedure, it’s disappointing that so many small businesses have had to wait to get the money they desperately need under policies they believed were there to protect them, policies they bought in good faith.
“Businesses deserve to be protected in a timely way, but instead they have been failed by their insurers and are now trying to make up for lost time. Providers must now pay-out quickly, and consider the steps they can take to progress these claims in a swift and seamless manner. Any paperwork required of claimants shouldn’t be onerous or time-consuming.
“Small businesses contribute trillions to the economy. The Financial Conduct Authority (FCA) was right to argue that disease or denial of access clauses within interruption policies should trigger pay-outs in the event of coronavirus-linked disruption. We are hugely grateful for its work in this space.”