In our November 11, 2020 Alert covering COVID-19 Business Interruption Insurance, we reported on The Financial Conduct Authority v. Arch Insurance (UK) and Others, a case in which the High Court of Justice in England ruled that some insurers improperly denied cover for business interruption losses allegedly suffered by hundreds of thousands of small businesses when the coronavirus lockdowns left them unable to trade.
A link to our previous alert is here.
The UK Supreme Court has now dismissed the insurers’ appeal of the High Court decision, ruling in favor of the insured businesses, inter alia, that the policies’ disease provisions (clauses which, in general, provide cover for business interruption losses resulting from the occurrence of a notifiable disease at or within a specified distance of the business premises) require insurers to pay out to cover losses caused by businesses being ordered to shut under coronavirus closures. The Supreme Court also held in policyholders’ favor with respect to the denial of access to business premises clauses (clauses which, in general, provide cover for business interruption losses resulting from public authority intervention preventing or hindering access to, or use of, the business premises) and hybrid clauses (clauses which combine the main elements of the disease and prevention of access clauses).
This case has, not surprisingly, drawn worldwide attention and is likely to be relied upon by policyholders and insurers alike in US COVID-19 business interruption coverage cases in arguments for and against coverage. We are constrained to note, however, that the decision, which is limited to the specific policy wordings at issue which may not be offered in the US, and which applies English law, may not translate to a meaningful argument in cases brought in US courts.