Second wave of insurance claims expected

Mishcon

New hospitality lockdowns will trigger additional business interruption insurance claims, according to Hospitality Insurance Group Action.

The recent High Court judgment underlined that businesses mandated to close by the government may have cover under their business interruption insurance policies.

HIGA advised that any business that holds a “Resilience” insurance policy, or a QBE 1 policy should check whether they should be submitting new claims notifications to their insurers to maximise recoveries under their policies. 

Sonia Campbell, the Mishcon de Reya partner leading the action on behalf of HIGA, said: “The new government measures will lead to a second wave of business interruption claims from businesses across the UK, before the insurers have even paid out in relation to the first wave of claims. We would strongly recommend all affected businesses with Resilience or QBE 1 policies to get in touch so we can continue pressing insurers to make these payouts as soon as possible.

“The announcement that pubs and restaurants are being forced to close yet again in central Scotland and possibly in parts of England on Monday is more devastating news for the hospitality industry. Many of these businesses have gone through substantial parts of the year with zero revenue and this seems to be happening again.”

In September, the High Court ruled on the FCA Business Interruption Insurance test case with the effect that many insurers should now pay out on business interruption policies where insured premises had been forced to close as a result of the government’s Coronavirus restrictions. The new round of restrictions could give rise to a tsunami of new claims even before the old ones have been settled.

Campbell said: “We are likely to see a flood of new business interruption insurance claims being made under current policies before they expire and before it's too late. Experience tells us that the insurers - many of whom should have agreed to pay out in line with the Court's judgment - are going to fight tooth and nail to limit their liability. We strongly recommend that all affected businesses, including those who are being forced to close for a second time - should consider whether they need to notify new business interruption claims under their current business interruption Resilience or QBE 1 insurance policies.”