The chair of Exmouth Chamber of Commerce has welcomed the Supreme Court's ruling on business interruption insurance.

Last Friday the court delivered its judgement on a test case brought by the Financial Conduct Authority (FCA), which was challenging the refusal of insurance companies to pay claims from small businesses forced to close because of the Covid-19 lockdown that came into force in March last year.

The companies believed their business interruption insurance would cover them when they were unable to trade. But some insurance companies declined to pay, saying their policies were not designed to cover a Government-imposed lockdown.

The FCA brought its test case putting forward policyholders' arguments to eight insurance companies towards the end of last year. The court found in favour of the policyholders on most of the key issues, but six of the insurers appealed.

On Friday the Supreme Court judges threw out those appeals and largely supported the arguments put forward by the FCA and an action group representing the policyholders of one of the insurance companies.

Reacting to the ruling, Sheldon Mills of the FCA said:

"Coronavirus is causing substantial loss and distress to businesses and many are under immense financial strain to stay afloat.

"This test case involved complex legal issues. Our aim throughout this test case has been to get clarity for as wide a range of parties as possible, as quickly as possible, and today's judgment decisively removes many of the roadblocks to claims by policyholders.

"We will be working with insurers to ensure that they now move quickly to pay claims that the judgment says should be paid, making interim payments wherever possible. Insurers should also communicate directly and quickly with policyholders who have made claims affected by the judgment to explain next steps.

"As we have recognised from the start of this case, tens of thousands of small firms and potentially hundreds of thousands of jobs are relying on this. We are grateful to the Supreme Court for delivering the judgment quickly. The speed with which it was reached reflects well on all parties."

The message to Exmouth businesses

The chair of Exmouth Chamber of Commerce, Laura Woodward-Drake, said:

"The recent results with the business interruption debate have certainly been good news for many. Whilst the caution of insurers is understandable, as rarely do so many people need the support at the same time, it is great to see that in the end, many businesses will benefit from the cover they have paid for.

"The pandemic has caused so much devastation to a majority of the business community and so it was disappointing to hear that many couldn't lean on the thing that was designed to be leant on during a crisis.

"This was a bold move for many insurers that arguably had wording that covered such instances, as it weakens the idea of investing in cover in the first place due to the increase in distrust.

"Many will hopefully learn that their policies reflect the same wording of those included in the test case and I recommend working with your broker to investigate any opportunities there are.

"For those that sadly have not been successful due to policy wording trumping the situation, I hope they hang on in there, knowing that there is a light at the end of the tunnel - make sure to reach out to your local support network for advice and help. We are all in this together."