A Supreme Court ruling means many thousands of businesses will now have their insurance claims for coronavirus-related business interruption losses paid.
The court ruled in favour of policyholders in the landmark Financial Conduct Authority (FCA) business interruption insurance test case.
The decision was described as a “big victory” by the Federation of Small Businesses (FSB) which said SMES would breathe a sigh of relief.
The FCA says its decision to bring the test case had removed the need for policyholders to resolve many key issues individually with their insurers.
Sheldon Mills, executive director, consumers and competition at the FCA, said: “Coronavirus is causing substantial loss and distress to businesses and many are under immense financial strain to stay afloat. This test case involved complex legal issues.
“Our aim throughout this test case has been to get clarity for as wide a range of parties as possible, as quickly as possible, and today’s judgment decisively removes many of the roadblocks to claims by policyholders.
“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. We are grateful to the Supreme Court for delivering the judgment quickly. The speed with which it was reached reflects well on all parties.”
FSB chairman Mike Cherry said: “It cements the high court’s decision to grant businesses left on the brink the insurance pay-outs they are rightfully owed.
“For many, it has been a long and difficult road to get to this stage so this will bring clarity and hope to the thousands of firms which have been left in financial limbo for almost a year.
“While this is good news, and while the law has to follow procedure, it’s disappointing that so many small businesses have had to wait to get the money they desperately need under policies they believed were there to protect them, policies they bought in good faith.”