NOW that the Supreme Court has ruled business interruption insurance policies must pay out, small businesses affected by lockdown last spring are being urged to review their policies to identify whether they can make a claim.

The ruling, which could benefit an estimated 370,000 businesses, means cover may be available not just for those forced to close entirely, but also for businesses partially closed or that were otherwise adversely affected. The Supreme Court has also indicated that insurers should be paying settlements as quickly as possible.

Businesses owners should look at their policies or speak to their brokers to identify a clause that explicitly relates to cover for business interruption caused by infectious or contagious disease. This needs to be done as a matter of urgency in order to claim within the time limits set out by your policy.

You will also need to pull together documentation to support your claim such as management and final accounts, sales and purchase invoices and bank statements to show income and expenditure. You will need to demonstrate the impact the lockdown had on your business by reference to results from previous months and years.

For the many businesses forced to completely close, it will be relatively easy to demonstrate the losses for claims. More complex cases will involve businesses that were not forced to close completely, had varying levels of trade during lockdown or changed their business model, such as switching to online trading. For these businesses, it will be necessary to consider the additional costs incurred and it will be more important to consider the volume of trading over the lockdown compared to the same period in previous years.

Insurers will determine the value of each claim on a case by case basis, based on guidance in the Supreme Court Judgement and further guidance due to be issued by the FCA, which will include Q&As for policyholders to assess whether their policy is encompassed by the recent ruling.

Insurers will require various documentation from each business, depending on specific circumstances and wording of policy clauses.

As requirements become clear, Armstrong Watson can assist businesses with formulating claims and interim accounts to demonstrate losses. For support and advice on how we can help, call Simon Turner on 01609 702000 or email