The covid-19 pandemic has profoundly affected the UK economy. At best, activities have been disrupted, or even have ceased altogether. In such circumstances, it is prudent to refer to cover afforded by any business interruption insurance policy that may have purchased. The importance to policy-holders of speedy settlement of claims in these circumstances cannot be underestimated. Thus, the decision of the High Court of 15 September 2020 in the insurance test case of the Financial Conduct Authority (FCA) vs Arch and Others is to be welcomed.

The FCA was advancing claims for policy-holders, considering 21 lead sample wordings from eight insurers. The judgment delivers advice on the proper interpretation of cover in certain non-damage business interruption insurance policy wordings. These apply without the prerequisite of physical damage, such as fire, for example. The decision of the court dealt with sample wordings only. This must be emphasised. However, the court identified key issues, assisting in the construction and interpretation of the very many different policy wordings in the market. The action by the FCA was largely successful on the policy-holders’ behalf. The insurers have stated that it is their intention to appeal against the decision, arguing that the financial effects of the pandemic fell outside the policy wordings.

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