By Luke Patel: Partner at Blacks Solicitors LLP

Luke Patel is a Partner at Leeds law firm Blacks Solicitors LLP specialising in commercial dispute resolution and heads up that team. Luke was the winner of the Best Professional in Business award at the Asian English Business Awards 2013. Described in the Legal 500 as “exceptional”, he primarily acts for individuals, owner managed businesses and SME’s in a wide range of sectors.


On Friday, the Supreme Court handed down its judgment in the Financial Conduct Authority (‘the FCA’)  Business Interruption Insurance (‘BII’) case. The case was brought by the FCA on behalf of affected policy holders, the vast majority of whom were small and medium size businesses/enterprises. The key point of the case was to establish if policy holders were entitled to payments to cover losses suffered as a result of Covid-19.  It was defended by eight insurers, who were several of the main providers of BII.


The court realised the importance of this case at the outset and stated that their aim was to give as much clarity as it could to as many policy holders/insurers as quickly as possible. It was agreed between the parties that the best way of doing this was to have the court consider a sample of 21 ‘standard form’ BII policies from 8 different providers. It is estimated that, in addition to the 21 policies considered, that there are likely up to 700 different types of policies, across 60 different insurers and 370,000 policy holders, which are likely affected by the judgment given.


Each of the policies considered contained a clause which afforded protection for business interruption, whether as a result of a notifiable disease outbreak (named ‘disease clauses’), the forced closure of premises/business activities (named ‘prevention of access clauses’) or hybrid clauses of the two.


In short, the Supreme Court when considering the policies largely agreed with the previous decision of the High Court and found in favour of the FCA and BII policy holders.


The Supreme Court carefully considered each category of clauses. A brief summary of the key findings for each are outlined below.


Disease clauses were those which typically covered business interruption losses incurred as a result of an occurrence of a Covid-19 within a specified radius of the business premises. The Supreme Court found that each case of Covid-19 was a separate occurrence and that the clauses would cover losses if there had been a case of the disease within the specified radius.


Prevention of access and hybrid clauses were those which specified a series of requirements before cover is provided (for instance, where restrictions are imposed by a public authority denying/preventing access to a business and this could have been as a result of a notifiable disease within a certain radius). The Supreme Court allowed that a mere instruction from a public authority (as well as compulsory rules/laws) could be considered an adequate restriction for the purpose of these clauses.


So, if a policy holder is afforded protection under one of the above types of clauses and if they can show that there was at least one case within the geographical area covered by the clause when the restrictions were imposed, they will likely be covered. The courts went into a great deal of detail as to what is likely to be considered adequate evidence of an occurrence of the disease for the sake of each claim. Details of these can be seen in the full judgments given by both the High Court and Supreme Court.


In respect of the losses suffered, the Supreme Court also stated that any trends or circumstances (such as a reduction in footfall for retail businesses) which arose out of the same underlying cause (the Covid-19 pandemic), should not be considered as a reason to reduce the losses when calculating what should be paid out.


The judgment has provided much needed clarity on an area which had already caused countless disputes between policy holders and insurers.


The wording of each policy will still need to be carefully considered to establish that cover is provided but in the event it is, it is hoped that the judgment will compel insurers to make payments as a matter of urgency to avoid the need for litigation from policy holders.


If you believe you may have a claim under a Business Interruption Insurance policy, or require guidance, please contact Luke Patel or Andrew Morgan on 0113 2279 270 or 0113 227 9355, or by email on or