‘We paid and paid for insurance but they wriggled away when Covid hit’
Supreme Court ruling gives businesses hope over their unpaid ‘business interruption’ claims
22 January, 2021 — By Calum Fraser
Hak Huseyin: ‘The insurance companies have let us down’
SMALL businesses left in dire straits by the pandemic have accused insurance firms of trying to “wriggle their way” out of paying claims.
When the government ordered businesses to close for the first time last year, many thought they would be covered for financial losses by the thousands they had paid annually for business interruption cover.
Instead, business owners told the Tribune that they were left empty-handed as insurance firms sought smallprint in the contracts to avoid paying.
This week, however, there was a glimmer of hope for those pursuing the money as the Financial Conduct Authority (FCA), representing hundreds of businesses, won a Supreme Court case against several insurance firms, potentially unlocking a £1.8billion payout.
Now businesses are scrambling to resubmit claims, hoping the case will force insurers to agree to pay.
Martin Whelan, who runs The Tollington and Big Red pubs in Holloway, said: “I have followed this from the start and in my opinion the insurance companies will drag this out. This court ruling is a good start but it’s going to take months. They have the money and the lawyers to keep delaying.”
Junction ward councillor Dave Poyser, who has co-written a letter to the Tribune today with his fellow councillors saying insurance companies should be “ashamed of themselves”, added: “All those poor people pay insurance every year and when the worst happens they get nothing. What the insurance companies are doing is not illegal but it stinks.”
Martin Whelan, who runs The Tollington and Big Red pubs
Hak Huseyin, chairman of the Archway Town Centre Traders’ Association, said: “The insurance companies have let us down. With insurance, you pay and pay and pay and when we turned to them after the first lockdown they tried to wriggle their way out. We would expect cover if we’ve paid for pandemic cover.”
The FCA first brought a “sample case” against insurers to the High Court last year after it was inundated with complaints from businesses who had assumed they were covered by their “Business Interruption” policies.
The FCA argued for policyholders that the “disease” and “prevention of access” clauses in a representative sample of 21 policy types provide cover in the circumstances of the coronavirus pandemic.
In reply, a group of insurers argued that because the government’s order that shops should close was not put into law then their policies had not been triggered.
The High Court ruled against this view last September, and on Friday the Supreme Court ruled in favour of the FCA.
Huw Evans, director general of the Association of British Insurers, said: “Insurers have supported this fast-track legal process every step of the way and we welcome the clarity that the judgment will bring to a number of complex issues.
“The insurance industry expects to pay out over £1.8bn in Covid-19 related claims across a range of products, including business interruption policies. Customers who have made claims that are affected by the test case will be contacted by their insurer to discuss what the judgment means for their claim.
He added: “All valid claims will be settled as soon as possible and in many cases the process of settling claims has begun. Some payments have already been made where valid business interruption claims have not been impacted by the test case ruling.”
For more information about the ruling go to: www.fca.org.uk
‘It feels like I’ve lost it all’
Freda Lawlor at beautiful in Archway
A BUSINESSWOMAN said she was “completely devastated” after learning her insurance does not cover any losses from the pandemic despite a landmark Supreme Court ruling this week that could see more than a £1billion paid out.
Freda Lawlor, who set up the “beautiful” salon in Archway more than a decade ago, thought it might be saved after judges on Friday ruled against insurers trying to avoid paying out for Business Interruption claims.
But she now fears her beloved business could go bust in the coming months after she was told that the policy has a line which negates “communicable diseases” cover.
The mother-of-one told the Tribune: “I am completely devastated about it. I thought I was going to be saved but now I’m back to square one. I don’t think I will be able to survive now, that’s why this insurance case is such a massive blow to me.”
Ms Lawlor added: “What is upsetting for me is I pay three insurances – building insurance, liability insurance and then insurance for the business.
“I’m forking out all this stuff, then a situation like this happens and you are left like a sinking ship with it.”
Debts have mounted during the pandemic and the lockdowns with a small business grant not covering the losses.
Ms Lawlor, who grew up nearby, said: “It’s not just the money, it’s my life. It feels like I’m losing it all and there’s nothing I can do.”
Her insurer was approached for comment by the Tribune, but they did not respond.