The FCA has now completed the first stage of providing clarity regarding the cover available to businesses affected by Covid-19. The FCA’s assessment following a review of the standard types of policies confirms our view that cover will in the majority of insurance products be limited to events of physical damage to the business premises and equipment but will not trigger compensation for a pandemic event.
For the remaining types of cover that do not require physical damage, the FCA will proceed with the unprecedented step of seeking clarification from the court as to the requirements and extent of compensation by reference to 17 different policy wordings considered to be a representative sample of products. These test cases, which will be heard in court as early as July 2020, aim to provide binding legal precedents to prevent a flood of insurance litigation. The court’s interpretation of the sample clauses will assist insurers and businesses in evaluating early, speedily and without the need for costly court proceedings which Covid-19 losses qualify for compensation.
Read the FCA’s latest statement here:
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