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Business interruption insurance: FCA’s final guidance

Over the past year, many businesses have sought to make claims on insurance policies for business interruption arising out of the Covid-19 pandemic.

The Financial Conduct Authority’s (FCA) Final Guidance provides clarity to businesses as to how insurers will be expected to resolve BI claims moving forwards.


The FCA described the recent BI test case as “probably the most important insurance decision of the last decade”. The FCA’s aim was to iron out issues of contractual uncertainty around the cover provided under certain non-damage BI insurance extensions. Following an appeal from the High Court, the Supreme Court ruled overwhelmingly in favour of policyholders, meaning many more claims will now be met. Nevertheless, all insurance policies are different and a number of policyholders have expressed concern about how to prove the presence of Covid-19 in their local area, so as to trigger policy coverage.

The FCA has therefore issued some Final Guidance with the aim to: (i) provide clarity, (ii) make the process of proving the presence of Covid-19 simpler for policyholders, and (iii) enable policyholders to receive payments as early as possible.

The Guidance

The Guidance is relevant for the purposes of making a claim under an insurance policy where the wording requires the policyholder to prove the presence of Covid-19 within a particular defined area around their premises (the area described within many insurance policies as the ‘relevant area’). Please click here for a link to the guidance.

The Guidance for insurers can be summarised as follows:

  • Insurers should provide fair consideration and assessment of any evidence which policyholders submit to prove the presence of Covid-19 and accept the policyholder’s evidence as sufficient to discharge the burden of proof which is on the policyholder (unless the insurer has more cogent counter-evidence).
  • Insurers are encouraged to streamline their claim procedure. The Guidance suggests that insurers could propose suitable and reasonable assessed dates that Covid-19 will be deemed to have been established in the relevant area, with policyholders being able to agree with the date, or otherwise prove an earlier date.
  • Where a policyholder has proved Covid-19 was present in a relevant area, insurers should not require its other policyholders also to prove the disease was sustained in that same area.

The Guidance also provides a non-exhaustive list of what should be considered reasonable evidence for a policyholder to rely on, including:

  • Personal knowledge of somebody within their area who tested positive for Covid-19.
  • Reports from reliable media outlets of Covid-19 cases at local sites, such as restaurants and  hospitals.
  • Personal knowledge of a staff member, customer or guest who tested positive within a 7 day period after being present at the business premises.
  • Information from a local GP surgery about whether they had a patient(s) who tested positive during the relevant period.
  • Information from local schools as to whether a student or teacher tested positive during the relevant period.
  • Official statements from universities confirming a case(s) of Covid-19.
  • More formal data, including data from the Office of National Statistics or data published by NHS England, where that data relates to the policyholder’s local area.

How can we help?

It has been estimated that the FCA case has affected 370,000 policyholders. The FCA’s Guidance, combined with the Supreme Court’s decision, clearly provides hope and guidance for policyholders.

If you have any questions relating to BI insurance policy coverage please get in touch.

Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.

This page may contain links that direct you to third party websites. We have no control over and are not responsible for the content, use by you or availability of those third party websites, for any products or services you buy through those sites or for the treatment of any personal information you provide to the third party.

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Robert Eldon

Managing Associate | Commercial Litigation

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