Supreme Court backs small business on Covid interruption

The Supreme Court has backed an earlier High Court ruling on the subject of validity of business interruption insurance, ruling in favour of hundreds of thousands of small businesses affected.

When the Covid-19 pandemic began small businesses found insurers refusing to pay out on business interruption clauses, with a group of 16 insurance firms initially named by the Financial Conduct Authority as skirting their payout responsibilities.

The reason cited often related to the Covid-19 strain not yet existing at the time of a policy being taken, though small businesses argued that policies would have otherwise been valid similar health risks to staff.

This morning judges ruled in favour of the Financial Conduct Authority, which had brought the case on behalf of aggrieved retailers. The case reached the Supreme Court following appeals from insurance businesses such as Hiscox, RSA and Arch, among others.

In the bike world the ACT lent its support to the case, in June conducting a survey across its membership of stores. Around 50 were said to have filed their views across the bicycle, music, book and other retail segments via the trade body.

One retailer affected told CI.N at the time that, with its business relying in part on bike hire among tourists the stress caused by being leaned on to remain open by otherwise largely welcomed Government policy had caused the business strain.

“We ended up staying open with minimum staff and control measures in place to reduce risk of infection after the government announced bike shop were essential, but it is quiet and business is badly effected,” said Bainton Bikes of Oxfordshire.

“We are struggling with the larger overheads of the business such as the rent. Turnover has halved and even with the government grant times are tough. We operate within tourism too, we hire bikes and operate tours, these have all cancelled.”

Sky reports the judge Lord Biggs stating: “On the insurers’ case, the cover apparently provided for business interruption caused by the effects of a national pandemic type of notifiable disease was in reality illusory, just when it might have been supposed to have been most needed by policyholders.

“That outcome seemed to me to be clearly contrary to the spirit and intent of the relevant provisions of the policies in issue.”

The verdict, which was delivered by video link, can be read in full here.