A group of high street businesses have joined the growing number of national and multinational companies suing over the non-payment of Covid Business Interruption insurance claims.
The claimants, a hairdressing salon and two gyms, are suing their insurer Ageas for the non-payment of claims associated with the closure or curtailment of their operations during the Covid pandemic.
The businesses, Hairlab Limited, Muscleworks Limited, and Bodylines Fitness Limited are claiming between £300,000 and £500,000 each under their policies. They claim they suffered losses relating to the Government imposed lockdowns and due to suspected Covid-related illnesses forcing staff members and customers to isolate. The claim form details how the company owners, their staff and customers all came down with illnesses showing the symptoms of Covid-19.
A test case brought by the Financial Conduct Authority with respect to Covid BI claims was heard by the Supreme Court last year. While the case largely ruled in favour of businesses claiming on their BI policies it only considered a handful of policy wordings. Policies that were not considered by the test case remain subject to challenge by insurers.
In a recently filed defence documents Ageas has defended the claim by arguing the business interruption losses were not suffered because of an incidence of a notifiable disease occurring at the claimant’s premises and that the policy should not cover the claimants for losses that arose because of the Government imposed lockdowns.
The defence states: “The indemnity provided includes within its scope only loss that arises specifically and directly because of any relevant occurrence of Covid-19 at the Claimants’ premises and does not include within its scope any loss that would not have arisen but for any such relevant occurrence of Covid-19 specifically at the Claimants’ premises.”
With respect to the claimants’ position that the companies were hit by Covid incidents at the premises, Ageas has argued that the claimants should be put to strict proof of such incidents and that any incidents occurring before the disease was declared notifiable on 5 March 2020 would not satisfy the policy requirements.
Set against some of the large Covid BI claims that are currently being fought out in the courts the Hairlab claim is relatively modest, amounting to little more than £1m in total. However it would be wrong to dismiss the claim as insignificant. There are two reasons for this. Firstly, any claim is important to the party pursing it, and £500,000 for a small business can be the difference between success and failure. Secondly, it is quite possible that the Hairlab case could be the tip of a very, very large iceberg. To date, the vast bulk of Covid BI related legal disputes have been filed by large corporates. Companies like Greggs, Gatwick Investments and London International Exhibition Centre have pursued their insurers for tens, sometimes hundreds of millions of pounds in potential losses. The Hairlab claim is different. It is small in size, but if it succeeds, it could act as the catalyst for many, many more SMEs to pursue their Covid BI claims more aggressively. Watch this space.
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