Thousands of small businesses are set to receive previously refused insurance claim payments covering losses from the first national lockdown last year, following a court ruling.
Supreme Court judges found in favour of small firms
receiving payments from Business Interruption Insurance policies.
The ruling provides a lifeline to thousands of small
businesses, allowing them to survive the coronavirus crisis, but could cost the
insurance sector hundreds of millions of pounds and lead to higher premiums in
the future.
The financial watchdog, the Financial Conduct Authority
(FCA), brought the test case, with eight insurers agreeing to take part in
proceedings.
The major business insurer Hiscox could see huge losses
after being challenged by thousands of its policyholders as part of the case.
Richard Leedham, who represented the Hiscox Action Group -
on behalf of small businesses, told the BBC: "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".
Among the other insurance companies including in the test
case are Arch, Argenta, MS Amlin, QBE and RSA - but over 60 insurers offered
similar business insurance policies.
Last year, many small businesses made claims through
business interruption insurance policies for loss of earnings when they had to
close.
Insurers refused to pay the claims, arguing only the most
specialist policies had cover for such unprecedented restrictions. Insurance companies
use phrases like an “act of God” to wriggle of of paying claims.
Fortunately for policyholders, it was agreed that a
selection of policy wordings should be tested in court, setting the parameters
for what would be considered a valid claim.
The court ruling provides guidance for over 700 policies, affecting
370,000 small businesses - although not all will benefit.
Many small businesses paid annual premiums of over £1,000
for business interruption insurance, sometimes as part of a package of cover
included with liability cover, and disease was covered.
Many business owners formed a ‘Covid Claims Group’, calling
for a quick resolution and settlement.
Recent insurance policies would have been amended for new
and renewing customers since Covid, so losses from the latest lockdown measures
in different parts of the UK would be specifically stated as included, or not,
in the cover of newer business interruption insurance policies.
The advice is to read your policy document.
Other Money News
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HSBC to close 82 branches in the UK
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China’s economy grew by 6.5% in last quarter of
2020
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As London’s populations falls, will City Centres
recover?
·
Mastercard may have to pay millions of
cardholders compensation following court ruling
See also: Have
you applied for the new lockdown grants?
By Charles Kelly, Wealth Mentor, Property Investor, Author
of Yes, Money Can Buy You Happiness and creator of Money Tips Podcast. See more
articles at www.moneytipsdaily.com
There are more examples and practical
steps to getting rich and being happy in my book, Yes, money can buy happiness, I cover the 3
R’s of Money Management, the Money B.E.L.I.E.F System and much more. Check it
out on Amazon http://bit.ly/2MoneyBook.
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