According to the BBC, following a Supreme Court ruling, tens of thousands of small businesses will receive insurance payouts to cover losses from the first national lockdown.
This could provide small businesses a lifeline, allowing them to continue to trade throughout and beyond the Coronavirus outbreak.
In the first national lockdown, last spring, many small businesses forced to closed made claims through business interruption insurance policies for loss of earnings. Many insurers refused to pay, arguing that only the most specialist policies had cover for such unprecedented restrictions.
The Financial Conduct Authority (FCA) had brought this test case with eight insurers agreeing to take part.
Richard Leedham, who was representing Hiscox Action Group on behalf of small businesses said:
‘This is a landmark victory for a small group of businesses who took on a huge insurance player and have been fully vindicated.
‘What is important now is that Hiscox accepts the Supreme Court’s verdict and starts paying out to its policy holders, many of whom are in danger of going under’.
The other insurers involved in this test case are Arch, Argenta, MS Amlin, QBE and RSA. They will now pay out on many, but not all, policies.
Director general of the Association of British Insurers, Huw Evans said:
‘All valid claims will be settled as soon as possible and in many cases the process of settling claims has begun.
‘We recognise this has been a particularly difficult time for many small businesses and naturally regret the Covid-19 restrictions have led to disputes with some customers’.