Business interruption insurance: five steps to making a claim

By Jonathan Cole

- Last updated on GMT

How do I claim business interruption insurance because of Coronavirus?

Related tags: Insurance, Restaurant, lockdown, Coronavirus

Businesses across the country are seeking pay outs on their business interruption insurance as a result of the Coronavirus pandemic. Follow these five steps to help you make a successful claim.

As the pandemic restrictions continue to devastate UK hospitality businesses, many have been looking to their insurance policies for some much needed relief.  
In a very welcome development, the Supreme Court has recently dismissed various appeals of the insurers​ in the high-profile Financial Conducts Authority business interruption insurance test case, that has been fast-tracked through the Courts. The High Court had previously considered 21 standard policy wordings from eight different insurers and found substantially in favour of the policy holders on the interpretation of the business interruption wording of their business insurance policies.

This landmark ruling will provide welcome relief and certainty for thousands of UK businesses that have either had their claim refused or have spent the past few months awaiting the outcome of this case.  

So what next if you think that you may be insured for losses caused by interruption to your business and how do you make a business interruption insurance claim? Here are five steps to take when making a claim.

1 Act promptly
If you think that you may have a business interruption claim against your insurer, you must notify your insurer without delay. This is an incredibly important aspect of pursuing a successful insurance claim, as most insurance policies require the insured to notify their insurer promptly of any claim and a failure to do so could result in your insurer legitimately refusing to indemnify you.  

2 Check your policy wording
Insurance policies tend to be long and complex documents, with defined terms and exclusions hidden at seemingly random sections of the policy document. The business interruption section in a policy is usually clearly marked and should specify any limit on the amount that you are able to recover. Your policy should also specify how you should make a claim. This is usually via a claims hotline number, following which you may be asked to submit a claim in writing with supporting evidence.  

3 Discuss with your broker
You may have a bespoke or hospitality specific insurance policy that you purchased through an insurance broker. If so, you should contact them to discuss whether or not they think that you have a claim and specifically how you should notify your insurer. They might even offer to pursue the claim on your behalf or at least assist you with doing so.  

4 Maintain and provide accurate records
As a consequence of the recent Supreme Court decision, many insurers are likely to be inundated with claims over the course of the next few months.  It is therefore very important to provide any evidence requested in an orderly manner and promptly, so as to ensure that the insurer is in the best possible position to quickly assess your claim. You should also keep a detailed record of exactly what you have submitted to your insurer and when.  

5 Challenge the decision
If your insurer rejects your claim, they are obliged to provide you with their reasons for doing so. If you disagree with these reasons, you should complain to your insurer explaining why. If, following their formal response to your complaint, you still want to challenge the decision then you may want to consider the legal recourse available to you. These are likely to include pursuing a complaint to the Financial Ombudsman Service or issuing a civil claim against your insurer. You may also want to explore the merits of pursing a claim against your broker, if they were engaged to secure a responsive business interruption insurance policy but have failed to do so. Even with the recent Supreme Court decision in the Financial Conduct Authority test case, many insurers will continue to dispute claims. Consequently, there will be a substantial number of legal disputes arising from the fall out over business interruption insurance. In the circumstances, prompt and decisive action is likely to be required to provide your business with greatest possible prospects of succeeding with a claim.

Jonathan Cole is a senior associate in the commercial dispute resolution team at London law firm Goodman Derrick LLP​.

Related topics: Advice

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