The High Court has ruled in favour of a group of insured businesses. The Hiscox Action Group (HAG) felt aggrieved that their policies provided by Hiscox Insurance did not cover loss of business due to Coronavirus. The insurers argued that the policies only covered local lockdowns or specific shutdowns on their properties caused by a disease. The case was brought with the help of the FCA. 16 insurers agreed to be defendants, so that clarity could be provided for wording that was present in 17 different policies.
Mark Killick, a HAG steering committee member, said: “Today’s judgement represents a huge victory for the Hiscox Action Group. We led this campaign and our stance has been fully vindicated by the court. The most important thing now is that the insurers accept this ruling and start to pay out rather than embark on a fruitless appeals process that will just cause more suffering for the very policyholders they were meant to protect.”
It should be noted that this now means that Hiscox policy holders will get compensation as if the pandemic never happened. This is a major boost for the small businesses affected. However, there are 350,000 holders of business interuption insurance with other insurers and, depending on the wording of their policies, they MAY get a payout. Hiscox in their advertising have always set out that their policies covered more eventualities than their competiton and were a sort of "premium" policy. So other policy holders may not be covered, especially if it did not even mention disease.
Hiscox said in a statement; "Hiscox recognises these are extremely difficult times for businesses and regrets any contract dispute with customers, which is why it is committed to seeking an expedited resolution through this industry test case."
An appeal is likely by the insurers although there is pressure on them to resolve the matter very quickly.
To be fair, insurers have to asses risk and it seems some risks are getting harder and harder to assess. Policies will always be open to some interpretation.
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Please note that the guide was mostly written pre Covid-19 and there have been some changes to insolvency legislation that limits creditors actions and relaxes rules regarding wrongful trading. A new 20 day moratorium for distressed businesses has also been introduced.