Introduction
The COVID-19 pandemic created unprecedented challenges for businesses worldwide, disrupting operations and threatening livelihoods. For many, Business Interruption (BI) insurance was the safety net they relied on to recover lost income during forced closures or operational restrictions. However, insurers’ initial denials of COVID-19-related claims left countless business owners frustrated and confused about their rights.
Fast-forward to 2024, and court rulings throughout the year have brought renewed clarity and opportunities for businesses to revisit their BI claims. In this article, we’ll break down what Business Interruption insurance is, how recent legal developments affect your rights, and why acting now is crucial for securing compensation.
What is Business Interruption Insurance?
Business Interruption insurance is designed to cover financial losses caused by disruptions to normal business operations. Typically, BI policies compensate for:
Loss of Revenue: Income lost due to the interruption of your business.
Fixed Expenses: Costs like rent, utilities, and wages that continue even during closures.
Additional Costs: Expenses incurred to minimize operational disruption, such as setting up temporary facilities.
BI insurance generally applies when physical damage—such as a fire or flood—prevents a business from operating. However, the pandemic tested the limits of these policies, as businesses faced interruptions not from physical damage, but from government-imposed lockdowns and restrictions.
Challenges with COVID-19 BI Claims
When businesses began filing BI claims due to pandemic-related closures, insurers often denied them, citing reasons such as:
Policy Exclusions: Many policies excluded coverage for pandemics or infectious diseases.
Ambiguous Wording: Terms like “occurrence,” “denial of access,” or “insured damage” were interpreted narrowly.
Evidentiary Burden: Insurers required specific proof of COVID-19 at or near the premises, which was often difficult to provide.
These rejections left business owners disheartened, but recent legal rulings have turned the tide in favour of policyholders.
The Legal Landscape in 2024
Throughout 2024, key court rulings clarified the scope of BI insurance coverage, particularly in cases involving COVID-19. The most notable developments include:
Expanded Definition of “Occurrence”
The term “occurrence” has been interpreted more broadly, allowing businesses to rely on public health data or circumstantial evidence to prove the presence of COVID-19 near their premises. This removes the previous requirement for direct diagnoses or specific cases tied to the insured location.
Focus on Denial of Access and Public Authority Clauses
Many BI policies include clauses covering losses due to government-mandated closures or restricted access. Recent rulings confirmed that such clauses apply to pandemic-related restrictions, provided there’s evidence of a notifiable disease in the vicinity.
Revisiting Denied Claims
Insurers are now compelled to reconsider claims previously denied under narrower interpretations of policy wordings. For businesses, this opens the door to financial relief they were initially denied.
Why Acting Now is Crucial
While the legal landscape has shifted in favour of policyholders, time is of the essence. BI claims are subject to statutory limitation periods, typically six years in the UK. For many businesses, the clock started ticking in March 2020 when the first lockdowns began. This means the deadline to file or reopen claims may expire as early as March 2026.
Additionally, insurers may not proactively contact policyholders to revisit denied claims. It’s up to business owners to take the initiative and seek what they’re entitled to.
How to Determine If You Have a Valid BI Claim
If your business was affected by the pandemic, here’s how you can assess whether you have a valid BI claim:
Review Your Policy
Look for clauses related to “denial of access,” “public authority restrictions,” or “notifiable diseases.” If you’re unsure, consult an expert to interpret the terms.
Let us do this for you.
Gather Evidence
Having evidence is crucial in any legal case, so getting your information together now is really important. Compiling any documents that demonstrate the impact of the pandemic on your business, and getting as much proof of what happened will be critical to your successful claim.
You should try to get things together such as the following as an example:
Proof of reduced income during the affected period. Your accountant should easily be able to produce your financial statements showing what your business was doing before, during and after the pandemic. Don’t forget, your business may have been moving forward with predicted increases that never got realised because of lockdown. If the trajectory was positive, but got shot down, it is not a bad idea to be able to illustrate this also.
Reduced footfall into your premises. For instance, this may have been as a result of the removal of table seating for businesses within the hospitality sector.
Communication from public health authorities or government bodies.
Records showing COVID-19 cases near your premises, this could be in relation to the proximity of a hospital within 1 mile for instance.
Any proof of staff showing COVID-19 like symptoms during March 2020
Do you have a HR department that has records of staff going sick during this time?
Does your accountant or Payroll bureau have staff referred to sick pay (EG Statutory Sick Pay (SSP))?
Any text messages or Emails from staff not being able to work due to illness or having displayed any symptoms of COVID from March 2020. At the time this may have been thought of as a cold or flu-like symptoms
Any local customers, visitors or any person who would be able to state they had been ill at the time with proof would suffice. For example a person who came into your premises and paid for an item (shown on a bank statement) and was unwell at the time, not knowing exactly what it was they were suffering from.
We have seen business owners reaching out to their customer bases on social media, seeking help from them to assist in this effort also. It all helps as reliance on the business owner as the sole provider of any evidence, might not be good enough to push the case over the line.
Seek Professional Assistance
BI claims can be complex, especially if your insurer previously denied coverage. Working with claims specialists or legal experts can improve your chances of success.
This is where Claims.com can help. We can assist you and deal with your claim through a law firm providing a No Win – No fee service, ensuring that you are not left out of pocket.
The Financial Impact
At the time of the pandemic and clearly for a period of time afterwards a successful BI claim could have provided a lifeline for businesses from the financial fallout of the pandemic.
If you are entertaining the notion of making a claim right now, then at least you could say that you made it. But if you turn the clocks back and think of the financial hardship, the emotional stress and confusion that beset you, why not claim now? The landscape has changed somewhat, so even if you were turned down before, is it not worth having another shout?
This could be the last chance saloon as the time allowable for claims to be submitted counts down.
Final Thoughts
The journey to securing a Business Interruption claim may not be straightforward, but the ever evolving legal landscape is creating new opportunities for businesses to recover their losses. If you believe your BI insurance should cover the financial impact of COVID-19, now is the time to act.
Don’t let your claim expire—review your policy, seek expert guidance, and ensure your business receives the compensation it deserves.
At Claims.com, we specialise in helping businesses navigate the claims process. Contact us today to find out how we can assist you in securing your Business Interruption claim.
The Evolution of Business Interruption Claims: A Timeline
March 2020 – The First Lockdown
The UK government implemented nationwide lockdown measures, forcing many businesses to close their doors or significantly scale back operations.
Business owners turned to their Business Interruption (BI) insurance policies for relief, only to discover that most claims were rejected due to ambiguous or restrictive policy wording.
June 2020 – The FCA Test Case is Launched
The Financial Conduct Authority (FCA) initiated a test case to clarify BI policy coverage for COVID-19-related losses.
The case involved 21 sample policy wordings from eight insurers, covering key issues like “denial of access”, “notifiable diseases”, and causation.
January 2021 – UK Supreme Court Delivers Landmark Judgement
The Supreme Court ruled in favour of policyholders on many key issues, including:
A single case of COVID-19 within a specified area could qualify as an “occurrence.”
Lockdown measures imposed by public authorities could trigger “denial of access” clauses.
This decision paved the way for thousands of businesses to pursue claims, although its scope was limited to the policies examined in the test case.
2021–2023 – Disputes Over Interpretation
Despite the Supreme Court’s ruling, disputes continued over specific policy types, such as At-the-Premises (ATP) clauses, and insurers often sought to limit their liability.
Many businesses faced hurdles proving the presence of COVID-19 at or near their premises.
2024 – Renewed Legal Clarity
Throughout 2024, several key rulings addressed unresolved issues, including the scope of ATP clauses and evidentiary requirements for proving COVID-19-related losses.
The December 2024 Court of Appeal ruling reaffirmed that:
Broader evidence, such as public health data, can satisfy the definition of “occurrence.”
Businesses denied claims under stricter interpretations may now have valid grounds to reopen them.
2025 – The Clock is Ticking
As we enter 2025, the statutory limitation period for filing COVID-19-related BI claims is approaching for many businesses.
For claims arising from the first lockdown in March 2020, the six-year deadline under the Limitation Act 1980 could expire by March 2026.
