Thames Valley: Small firms to benefit from Supreme Court decision

David Murray and Emma Ford, in leading Thames Valley law firm Blandy & Blandy’s dispute resolution team, explain the impact of the Supreme Court’s ruling on business interruption insurance payouts for smaller businesses affected by the Covid-19 pandemic.

David Murray and Emma Ford

In a judgement handed down on January 15, 2020, the Supreme Court has ruled that insurance payments will now be available to smaller firms, to assist with the financial losses suffered during the first Covid-19 lockdown.

When prime minister Boris Johnson implemented a national lockdown in England on March 23, 2020, a vast number of businesses were obliged to close their doors. The resulting loss of earnings has had a devastating effect upon smaller firms in particular, many of whom have been left facing an uncertain future.

In an attempt to recover their losses, many businesses turned to their ‘business interruption insurance’ policies. However, their claims were largely rejected by insurance companies, due to the unprecedented and uncertain nature of the pandemic.

It was widely maintained that only a more specialist policy would be able to cover financial losses brought about by the lockdown. According to the Association of British Insurers, business interruption policies ‘are not generally designed, priced or sold to cover unspecified global pandemics.’

The case was fast-tracked to the Supreme Court and this ruling will be welcomed by an estimated 370,000 firms across the country.

Having dismissed the appeals of six insurers, the Supreme Court has now urged all insurance companies to contact their customers as soon as possible and to settle their Covid-19 related claims.

The Financial Conduct Authority (FCA) has confirmed that it will be working alongside insurance companies, to give effect to this decision.

In light of the announcement of a further lockdown in England on January 4, 2021, smaller businesses in the hospitality sector in particular, are facing difficult months ahead. The prospect of an insurance pay-out may finally bring an end to prolonged financial uncertainty.

As a result of this ruling, policy-holders are now in a position of greater clarity regarding their ability to claim for their losses, as a result of both past and current lockdowns. It is hoped that this judgement will provide a much-needed lifeline for smaller businesses in the challenging months ahead.

If your business has been affected by the above issue, our specialist Dispute Resolution team can advise on matters, as well as in relation to other disputes that may have arisen during or as a result of the pandemic.

For further information or legal advice, please visit, contact or call 0118 951 6800.