Introduction

The COVID-19 pandemic created unprecedented challenges for businesses worldwide, disrupting operations and threatening livelihoods. For many, Business Interruption (BI) insurance was the safety net they relied on to recover lost income during forced closures or operational restrictions. However, insurers’ initial denials of COVID-19-related claims left countless business owners frustrated and confused about their rights.

Fast-forward to 2024, and court rulings throughout the year have brought renewed clarity and opportunities for businesses to revisit their BI claims. In this article, we’ll break down what Business Interruption insurance is, how recent legal developments affect your rights, and why acting now is crucial for securing compensation.

What is Business Interruption Insurance?

Business Interruption insurance is designed to cover financial losses caused by disruptions to normal business operations. Typically, BI policies compensate for:

• Loss of Revenue: Income lost due to the interruption of your business.
• Fixed Expenses: Costs like rent, utilities, and wages that continue even during closures.
• Additional Costs: Expenses incurred to minimize operational disruption, such as setting up temporary facilities.

BI insurance generally applies when physical damage—such as a fire or flood—prevents a business from operating. However, the pandemic tested the limits of these policies, as businesses faced interruptions not from physical damage, but from government-imposed lockdowns and restrictions.

Challenges with COVID-19 BI Claims

When businesses began filing BI claims due to pandemic-related closures, insurers often denied them, citing reasons such as:

• Policy Exclusions: Many policies excluded coverage for pandemics or infectious diseases.
• Ambiguous Wording: Terms like “occurrence,” “denial of access,” or “insured damage” were interpreted narrowly.
• Evidentiary Burden: Insurers required specific proof of COVID-19 at or near the premises, which was often difficult to provide.

These rejections left business owners disheartened, but recent legal rulings have turned the tide in favour of policyholders.

The Legal Landscape in 2024

Expanded Definition of “Occurrence”

The term “occurrence” has been interpreted more broadly, allowing businesses to rely on public health data or circumstantial evidence to prove the presence of COVID-19 near their premises. This removes the previous requirement for direct diagnoses or specific cases tied to the insured location.

Focus on Denial of Access and Public Authority Clauses

Many BI policies include clauses covering losses due to government-mandated closures or restricted access. Recent rulings confirmed that such clauses apply to pandemic-related restrictions, provided there’s evidence of a notifiable disease in the vicinity.

Revisiting Denied Claims

Insurers are now compelled to reconsider claims previously denied under narrower interpretations of policy wordings. For businesses, this opens the door to financial relief they were initially denied.

Why Acting Now is Crucial

While the legal landscape has shifted in favour of policyholders, time is of the essence. BI claims are subject to statutory limitation periods, typically six years in the UK. For many businesses, the clock started ticking in March 2020 when the first lockdowns began. This means the deadline to file or reopen claims may expire as early as March 2026.

How to Determine If You Have a Valid BI Claim

Review Your Policy

Look for clauses related to “denial of access,” “public authority restrictions,” or “notifiable diseases.” If you’re unsure, consult an expert to interpret the terms.

Gather Evidence

• Proof of reduced income during the affected period.
• Reduced footfall into your premises.
• Communication from public health authorities or government bodies.
• Records showing COVID-19 cases near your premises.
• Any proof of staff showing COVID-19 symptoms during March 2020.

Seek Professional Assistance

BI claims can be complex, especially if your insurer previously denied coverage. Working with claims specialists or legal experts can improve your chances of success.

Final Thoughts

The journey to securing a Business Interruption claim may not be straightforward, but the ever-evolving legal landscape is creating new opportunities for businesses to recover their losses. If you believe your BI insurance should cover the financial impact of COVID-19, now is the time to act.

The Evolution of Business Interruption Claims: A Timeline

March 2020 – The First Lockdown

The UK government implemented nationwide lockdown measures, forcing many businesses to close their doors or significantly scale back operations.

June 2020 – The FCA Test Case is Launched

The Financial Conduct Authority (FCA) initiated a test case to clarify BI policy coverage for COVID-19-related losses.

January 2021 – UK Supreme Court Delivers Landmark Judgement

The Supreme Court ruled in favour of policyholders on many key issues, including allowing a single case of COVID-19 within a specified area to qualify as an “occurrence.”

2024 – Renewed Legal Clarity

Key rulings addressed unresolved issues, reaffirming that broader evidence, such as public health data, can satisfy the definition of “occurrence.”

2025 – The Clock is Ticking

As we enter 2025, the statutory limitation period for filing COVID-19-related BI claims is approaching. For claims arising from the first lockdown in March 2020, the six-year deadline could expire by March 2026.