Business Interruption Cover and Covid-19 - the FCA Test Case
28 September 2020

Interruptions to your charity or business activities due to Covid-19 and the FCA Test Case

Updated 28 September 2020

If you currently hold a property insurance policy through Unity, you may have Business Interruption (BI) cover as part of your policy. Such insurance exists to cover loss of income or the cost of alternative ways of operating. However, depending on the wording of your policy, this may not necessarily cover you for the COVID-19 outbreak and the adverse effect the subsequent lockdown may have had or is continuing to have on your charity or business. 

As BI cover is often part of a wider property insurance policy, without physical damage from a covered section, income loss associated with people choosing not to travel and/or not to patronize a business (even if travel is restricted by a government authority), is unlikely to lead to a valid claim under most property insurance policies.

That said, The Financial Conduct Authority (FCA) that regulates the insurance industry has received a number of questions and concerns from customers where their business interruption policies do not cover losses associated with COVID-19.  As a result, the FCA sought court declarations aimed at resolving contractual uncertainty in selected BI insurance policies.

What the test case’s judgment means for you as a policyholder

The ruling provides more legal certainty in the business interruption insurance market, which should mean quicker answers to your claims questions.  However each insurer and policy needs to be considered separately.

If you have made a claim on your BI cover

You can expect to hear from your insurer who will proceed with the claim in accordance with how the court’s decision applies to your policy.
It is possible that the judgment will be appealed.  However this should not stop you seeking to settle your claim with the insurer before the outcome of any appeal is known.

How claims on your policy’s BI cover will be affected

Depending on your insurer’s wording, you will be affected differently by the court’s decision.  We have looked at the main insurers that we use. 
Please check below on how this affects your policy.

Scout and Guides Property and Equipment with Atrium – Business Interruption claims without property damage are not covered. https://www.unityinsuranceservices.co.uk/blog/coronavirus-and-your-property-and-equipment-insurance

Ansvar - losses arising from the COVID-19 pandemic are not covered by Ansvar’s policies. https://www.ansvar.co.uk/policyholders/fac-test-case/

Ecclesiastical - losses arising from the COVID-19 pandemic are not covered by Ecclesiastical's Business Interruption policies. https://www.ecclesiastical.com/latest-news/fca-test-case/ 

Zurich - do not provide cover https://www.zurich.co.uk/business/coronavirus/business-interruption-fca-test-case 

Markel - Markel still considering how this implicates them but a letter will be sent to all claimants. https://uk.markel.com/insurance/news/announcement-for-non-damage-business-interruption 

Answering your questions

If you’re claiming on your Scout and Guides Property and Equipment policy, please contact our Claims Handler on 0345 0407701.

Otherwise, please contact the insurer’s claims handling services, whose details can be found in your policy documentation.

For further information on the test case: 

The Financial Conduct Authority (FCA) - Result of FCA’s Business Interruption test case 

The FCA’s legal team at Herbert Smith Freehills - Judgment handed down in FCA’s COVID-19 business interruption insurance test case