This week, the UK business interruption test case appeal began with several major insurance companies claiming to the U.K. Supreme Court, that it is inappropriate to assume there could be unlimited coverage during a pandemic.
The appeal to the Supreme Court is of the business interruption test case that was fast-tracked to the Court for a four-day hearing. Earlier this fall a lower court found largely in favor of the FCA and insureds, ruling that some insurers had wrongly rejected business interruption claims. Several insurers appealed parts of the ruling that they lost, maintaining that they are paying valid claims and that if they were required to pay all claims, despite the validity, the insurance industry would collapse.
The test case revolved around whether more than 20 different policy wordings should cover disruptions spurred by the virus, potentially affecting 700 types of policies, 60 insurers, hundreds of thousands of policyholders and billions of pounds in claims.
Like business interruption suits around the world, the test case includes arguments from the insurers that "prevention of access" clauses do not apply to government restrictions, and that disease clauses were not designed to, and do not, cover a nationwide pandemic.
Despite differences between U.S. and U.K. laws and courts, attorneys and insurance professionals in the U.S. are paying close attention to this test case. Tune in early next week for an update.