Small businesses will now receive insurance payouts covering losses from the first national lockdown, following a Supreme Court ruling.

This follows the Financial Conduct Authority’s (FCA) appeal on behalf of policyholders, meaning many thousands of small companies will now receive payments from business interruption insurance policies for coronavirus-related losses.  

During the coronavirus lockdown in spring 2020, many insurers refused to pay small businesses making claims through business interruption insurance policies for the loss of earnings due to closure; many insurers argued that only specialist insurance policies could cover such unprecedented circumstances.

The FCA said that the ruling may affect 370,000 small businesses, which were identified as holding 700 types of policies issued by 60 insurers.

On the FCA’s appeal, the Supreme Court covered issues such as disease and prevention of access clauses, and ruled that cover may be available for partial closure of premises (as well as full closure) and for mandatory closure orders that were not legally binding.