Sidmouth Chamber of Commerce has given a cautious welcome to the Supreme Court's ruling on business interruption insurance.

Last Friday the court delivered its judgement on a test case brought by the Financial Conduct Authority (FCA), which was challenging the refusal of insurance companies to pay claims from small businesses forced to close because of the Covid-19 lockdown that came into force in March last year.

The companies believed their business interruption insurance would cover them when they were unable to trade. But some insurance companies declined to pay, saying their policies were not designed to cover a Government-imposed lockdown.

This issue came up for discussion last year at some of Sidmouth Chamber of Commerce's monthly breakfast meetings, which have been conducted via Zoom since the start of the pandemic.

The FCA brought its test case putting forward policyholders' arguments to eight insurance companies towards the end of last year. The court found in favour of the policyholders on most of the key issues, but six of the insurers appealed.

On Friday the Supreme Court judges threw out those appeals and largely supported the arguments put forward by the FCA and an action group representing the policyholders of one of the insurance companies.

Reacting to the ruling, Sheldon Mills of the FCA said:

"Coronavirus is causing substantial loss and distress to businesses and many are under immense financial strain to stay afloat. This test case involved complex legal issues. Our aim throughout this test case has been to get clarity for as wide a range of parties as possible, as quickly as possible, and today's judgment decisively removes many of the roadblocks to claims by policyholders.

"We will be working with insurers to ensure that they now move quickly to pay claims that the judgment says should be paid, making interim payments wherever possible. Insurers should also communicate directly and quickly with policyholders who have made claims affected by the judgment to explain next steps.

"As we have recognised from the start of this case, tens of thousands of small firms and potentially hundreds of thousands of jobs are relying on this. We are grateful to the Supreme Court for delivering the judgment quickly. The speed with which it was reached reflects well on all parties."

Sidmouth Chamber of Commerce's response

However, the Sidmouth Chamber of Commerce said it is too soon to say how many local companies affected by the lockdown will benefit from the ruling.

A spokesman told Sidmouth Nub News: "'Insurance against business interruption has been an issue locally. So the Supreme Court ruling is welcome and helpful.

"However, it is important to stress that this is a very complex issue, and a great deal depends upon the precise wording of your insurance cover.

"So although the ruling is probably a significant victory for the business community, it is not at all clear how it will impact upon individual businesses. Over time there will no doubt be further evidence and test cases, and a clearer picture will emerge.

"Perhaps the lesson to be learned is that businesses cannot always rely upon the interpretation of a policy provided by the insurer, and need to watch the bigger picture, and follow developments and decisions at national level."