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Future of Work

Tens of thousands of small businesses are set to receive insurance payouts covering losses in the first national lockdown, following a court ruling. The Supreme Court found in favour of small firms receiving payments from business interruption insurance policies.

For some, it could provide the lifeline allowing them to trade beyond the coronavirus crisis. The ruling could cost the insurance sector hundreds of millions of pounds.

In the lockdown of last spring, many small businesses made claims through business interruption insurance policies for loss of earnings when they had to close. But many insurers refused to pay, arguing only the most specialist policies had cover for such unprecedented restrictions.

It was agreed that a selection of policy wordings should be tested in court, setting the parameters for what would be considered a valid claim. The ruling provides guidance for a wider pool of 700 policies, potentially affecting 370,000 small businesses.

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