The Supreme Court has delivered its judgment in respect of the Financial Conduct Authority (“FCA”) business interruption insurance test case, with the court’s ruling in the favour of small firms.

The court’s decision brings to a close the legal arguments imposed by 14 types of policies issued by six insurers, and a substantial number of similar policies in the wider markets.

Reports suggest that this could potentially force insurers to pay out £1.2bn in CBI claims.

The FCA first brought the case against the courts, initially selecting a representative sample of 21 policy types issued by eight insurance groups.

Insurers are expected to move quickly to pay claims that the judgment says should be paid, making interim payments wherever possible.

Customers who have made claims that are affected by the test case will be contacted by their insurer to discuss what the judgment means for their claim.

It is stated that all valid claims will be settled as soon as possible and in many cases the process of settling claims has begun. Some payments have already been made where valid business interruption claims have not been impacted by the test case ruling.

This is obviously great and much needed news for those small businesses that have been affected by COVID and now have a valid claim for business interruption.

Insurance policies would have been amended for new and renewing customers since this issue emerged, so losses from the latest lockdown measures in different parts of the UK would be clearly stated as part of the cover – or not – in new business interruption insurance policies.

Should you need any assistance with the preparation of information to your insurance company, such as quantifying or reviewing the loss claim, please contact your local Barnes Roffe partner.