Boots & Sabers

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0841, 16 Nov 20

Should Insurance Cover COVID Business Losses?

Interesting case in the UK.

A hotly-contested case about insurance payouts for small businesses who were unable to trade owing to lockdown heads to the Supreme Court on Monday.

A host of businesses closed or faced significant losses, so made claims on their business interruption insurance.

But many insurers disputed the claims, arguing policies were never meant to cover such unprecedented restrictions.

Supreme Court judges will make a final judgement after the hearing, which is expected to last four days.

The issue will have had implications for 370,000 – mostly small – businesses, and involves potential payouts of £1.2bn.

High Court judges earlier found mostly in favour of insurers having to pay out to policyholders regarding a selection of policy types. Some of these decisions are now being appealed against at the Supreme Court.

This should be a relatively simple case. The contract is the contract and it says what it says. If there is language in the contract that excludes something like a government shutdown due to pandemic, or if there is language that says that “everything not covered is considered NOT covered” then the insurers are off the hook. It would be inappropriate to hold insurers to cover losses for a circumstance that they didn’t agree to cover and for an action that they didn’t cause.

The only question should be, “what is the language of the contract?” If the language is ambiguous and the business owners had a reasonable expectation of the insurers covering their losses, then perhaps the court will rule in the business owner’s favor.

It’s an important case because some judges in the U.S. have shown that they will look to foreign rulings to inform their decisions. Our judges shouldn’t do that, but they do. Watch this case in the U.K. If the High Court forces insurers to pay, there will be a slew of additional lawsuits in the U.S.


0841, 16 November 2020


  1. jsr

    Many insurance policies have exclusions for government action, war, and Acts of G_d.  If there’s no exclusion that fits, it’s covered.  But those exclusions are likely to be argued about in court.

  2. Tuerqas

    Is God a dirty word now?  Is it on a pc list of banned words?  Why the broken spelling? Especially in this case where you are specifically quoting a phrase still used in insurance…doesn’t make sense to me.  Why?

  3. Mar

    How about a sign of respect?

  4. Tuerqas

    You mean it was written that way as a sign of respect?

  5. dad29

    Usually “G_d” is used by practicing Jews who cannot use the full name out of respect for God.

  6. Merlin

    If I can understand the substance I seldom quibble over form, but thanks to dad for the bit of education here.

  7. dad29

    The bottom-line question:  is Covid an “insurable event”?  Since no other disease is treated as such, including the ‘pandemic’ Swine Flu, it’s likely there will be no insurance offerings along this line.

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