Hospitality Insurance Group Action (HIGA), which has taken part in legal action against the major business insurers, has said that a significant number of claims which were previously denied may still be claimable.
HIGA was one of only two policyholder groups allowed to take part in the FCA Insurance test case, which examined the business interruption policies of eight insurers including QBE and Aviva, to determine whether or not the policies should trigger business interruption claims related to Covid-19.
HIGA submitted a detailed case as to why it believed Aviva and QBE policies in particular should pay out.
Sonia Campbell, partner at Mishcon de Reya, who has been leading the HIGA legal action against the major insurers, told The Caterer: "In our view a significantly high proportion [of claimants] could have potential cover.
"These businesses were forced to close and suffered business interruption through not being able to trade in the way they normally would.
"Many insurers have had claims declined and had accepted that at face value. Now is the time for those who have had claims declined to take another look and not just accept that they don't have cover – even if they've been told ‘no' months ago, and even though the case hasn't yet been decided."
The verdict in the test case is due mid-September and, if favourable, claimants would have the right to go back to their insurers to make a Covid-related claim. Additionally, Campbell said insurers had a duty to write to those insured informing them of the outcome of the FCA Test Case and that they may revisit the claim.
Campbell said it was impossible to put a figure on potential payouts as every claim would have to be "individually adjusted" and would depend on policy wording and individual losses.
"The limits of cover are different – some losses might exceed the limit of cover. The ones we are dealing with have not gone out of business but it is a real threat. The recovery of insurance could mean the difference between survival and going out of business."
In addition, she said there was potential scope for businesses to claim damages for late payment by way of interest.
Since March, many businesses have had business interruption claims denied because insurers claimed the Covid-19 pandemic was not covered in policies. The FCA announced in May that it would seek a court declaration to resolve uncertainty around whether businesses can claim under business interruption insurance cover for coronavirus losses.
It has said that more than 370,000 businesses were potentially affected.
Hospitality businesses insured with QBE or Aviva who are interested in joining the action group are invited to email firstname.lastname@example.org for more information.