Car dealers denied claims under business interruption policies could now get pay-outs after Supreme Court ruling

Time 4 months ago

Car dealers that were denied payouts by their insurers under business interruption insurance policies could be in line for a pay-out after a Supreme Court ruling.

The Supreme Court has ‘substantially allowed’ an appeal brought by the Financial Conduct Authority in a landmark £1.2bn legal battle over businesses’ ability to claim on insurance for coronavirus-related disruption.

Many car dealers found they were unable to claim on their policies when they were forced to shut by Covid restrictions as insurers claimed the coronavirus pandemic wasn’t covered.


Many had specific clauses that appeared to cover the impact of Covid under ‘infectious/notifiable diseases’ but yet they were still denied.

Car dealers have now been urged to ‘contact their brokers immediately’ as they may be able to now successfully claim.

The FCA previously said it was bringing the legal action following ‘widespread concern’ over ‘the lack of clarity and certainty’ for businesses seeking to cover substantial losses incurred by the pandemic and subsequent national lockdowns.

In September, the High Court ruled on several ‘lead’ insurance policies issued by eight separate insurers largely in favour of the FCA.


The regulator said the judgment paved the way for many insurance policies to pay out on Covid-19 business interruption claims.

Six of the insurers – Arch, Argenta, Hiscox, MS Amlin, QBE and RSA – appealed against aspects of the High Court’s ruling, as did the Hiscox Action Group, which represents around 400 businesses insured by Hiscox.

Announcing the Supreme Court’s ruling today, Lord Hamblen said: ‘The appeals of the Financial Conduct Authority and the Hiscox Action Group are substantially allowed and the insurers’ appeals are dismissed.’

In a statement after the ruling, the FCA’s Sheldon Mills, welcomed the decision, saying the judgment ‘decisively removes many of the roadblocks to claims by policyholders’.

He added: ‘We will be working with insurers to ensure that they now move quickly to pay claims that the judgment says should be paid, making interim payments wherever possible.

‘Insurers should also communicate directly and quickly with policyholders who have made claims affected by the judgment to explain next steps.

‘As we have recognised from the start of this case, tens of thousands of small firms and potentially hundreds of thousands of jobs are relying on this.’

Mike Jones, chairman of accountancy firm ASE Global and compiler of the Car Dealer Top 100 list, said it was a ‘boost to businesses’.

He told Car Dealer: ‘The ruling of the Supreme Court, largely in favour of policyholders and the City regulators, is great news for those policyholders whose business interruption claims had been rejected despite them having disease or prevention of access clauses.

‘While the court ruled that losses arising from a general reduction in consumer demand and the government’s lockdown measures were not covered those policyholders who had specific clauses should now be able to progress with their claims, providing a much needed boost to businesses struggling through lockdown 3.’

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Darren Fletcher, legal advisor at Lawgistics, said car dealers should ‘speak to their brokers immediately’ if they had cover.

He said: ‘The main point to take away is that the Supreme Court have ruled in favour of the FCA, BI Insurance should cover any downturn due to Covid, subject to the terms and conditions of the policy.

‘So, if you have BI insurance that may have covered you, speak to your broker immediately as in most scenarios the insurers will need to compensate you.’

Graham Small, a partner at JMW Solicitors, added: ‘This is a good day for the thousands of businesses who hold business interruption insurance – those that have made a claim can be confident that they will be paid and any businesses that have had a claim rejected previous to today’s ruling should certainly be thinking about revisiting it.

‘A lot of companies will be entitled to multiple claims for disruption incurred throughout the last 10 months.’

James Baggott's avatar

James is the founder and editor-in-chief of Car Dealer Magazine, and CEO of parent company Baize Group. James has been a motoring journalist for more than 20 years writing about cars and the car industry.

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