On 9 June 2020, the Financial Conduct Authority issued declaratory proceedings with Claim Number FL-2020-000018 in the High Court of England and Wales to commence a test case in respect of business interruption (“BI”) policies that provide cover where there has been no physical damage to the insured property (a “Non-damage BI Policy”). The aim of the Test Case is to resolve uncertainty as to whether Non-damage BI Policies respond to claims related to the coronavirus pandemic.
The FCA has involved a number of insurers as parties in the Test Case, which considered a range of Non-damage BI Policy wordings that are representative of those used by the insurance industry. Although LMIE is not a named party in the Test Case, it supports the FCA’s aim to achieve clarity for all concerned and is reviewing how its UK Non-damage BI Policies will be affected by the final resolution of the Test Case.
If you have submitted a COVID-19 related non-damage BI claim, you will have been contacted to confirm whether or not your policy is affected by the Test Case.
We will be updating this page with information in relation to the Test Case including:
- when judgments are given;
- when the Test Case reaches final resolution (which may be following an appeal to the UK Supreme Court); and
- if the scope of the Test Case changes at any time.
Following an eight day court hearing before Lord Justice Flaux and Mr Justice Butcher on 20-23 and 27-30 July 2020, judgment in the Test Case was handed down on Tuesday, 15 September 2020 (the "First instance Judgment"). The First instance Judgment is available at:
The parties will now have time to consider the judgment and determine whether they intend to appeal it in part or in whole.
Any applications to appeal the decision will be heard at a further 'consequentials' hearing before the High Court. The date of this hearing has yet to be determined, but we understand it is likely to take place during October. The FCA and the Insurers have agreed that they will seek to have any appeal heard on an expedited basis, given the importance of the matter for so many policyholders.
Information about the Test Case can be found:
- On the FCA website https://www.fca.org.uk/firms/business-interruption-insurance; and
- Information concerning BI insurance can be found on the Financial Ombudsman Service’s website https://www.financial-ombudsman.org.uk/coronavirus.
We also recommend that all UK policyholders subscribe for FCA email alerts about the Test Case so that they are kept fully up to date on the progress of the case. Policyholders can sign up for the FCA’s BI insurance email updates here https://www.fca.org.uk/sign-business-interruption-bi-insurance-email-updates.
In the meantime, we have prepared answers to frequently asked questions which may help;
For UK Policyholders
For UK Policyholders
My LMIE policy does not include non-damage BI cover:
- You are not affected by the Test Case.
- If you have a claim, you should submit your claim as set out in your policy documents.
My LMIE policy includes non-damage BI cover, but I do not have a COVID-19 related claim:
- If you do not have a COVID-19 related claim, you are not affected by the Test Case. Please continue to submit non-COVID-19 related claims as set out in your policy document.
- If you are unsure whether you have a COVID-19 related claim, please contact your broker or the agent through whom you purchased your policy.
My LMIE policy includes non-damage BI cover and I have a COVID-19 related claim:
- The outcome of your COVID-19 related non-damage BI claim may be affected by the final resolution of the Test Case. Please go to the Potentially Affected Claimants’ page.
For Potentially Affected Claimants
I have a COVID-19 related non-damage BI claim but have not yet submitted my claim:
- If you have not yet submitted your COVID-19 related non-damage BI claim, please do so by following the claims procedure as set out in your policy.
- Once your claim has been received, you will receive correspondence from us or our agents explaining the next steps in the process.
I have submitted a COVID-19 related non-damage BI claim:
- Many COVID-19 related non-damage BI claims have been declined by LMIE on the basis that cover was not provided under our policies. If your claim (or part of it) has been declined, you will have received correspondence from us or our agents to that effect.
- However, LMIE will reassess all COVID-19 related non-damage BI claims that (a) have been declined and (b) are considered by LMIE to be potentially affected by the final outcome of the Test Case (a “Potentially Affected Claim”) following the Court’s final decision in the Test Case, as that final decision could change LMIE’s initial coverage decision. LMIE does not know what that final outcome will be, however, and cannot comment further on that at this stage.
- In the meantime, LMIE is monitoring the progress of the Test Case closely and will communicate further with you at the following times:
- Following the initial submission of your claim, to confirm whether or not your non-damage BI claim is a Potentially Affected Claim, explain the implications of that, and outline the next steps in the process; and
- If your non-damage BI claim is a Potentially Affected Claim:
- When any judgments at first instance or appeals on substantive issues in the Test Case are given;
- When the Test Case reaches final resolution; and
- If the scope of the Test Case changes at any time.
In any event, if your COVID-19 related non-damage BI claim is a Potentially Affected Claim, a final decision on your claim will be taken promptly on the final resolution of the Test Case.
- If, once the Test Case reaches final resolution and you are still not happy with the final decision on your claim, you are able to complain to us and we will review this in line with our complaints handling procedures, for complaints click here.
For Potentially Affected Complainants
My COVID-19 related non-damage BI claim has been rejected and I have logged a complaint:
- Your complaint is being reviewed under the LMIE complaints process and in accordance with the FCA’s Guidance.
- LMIE will communicate with you to confirm whether or not your complaint is potentially affected by the final resolution of the Test Case (a “Potentially Affected Complaint”), explain the implications of that, and outline the next steps in the process.
My complaint has been escalated to the Financial Ombudsman Service:
- If your complaint about a relevant Non-damage BI Policy has been referred to the Financial Ombudsman Service, we have written to them with the results of LMIE’s review of the subject policy and its decision on your claim.
- You may contact the Financial Ombudsman Service https://www.financial-ombudsman.org.uk/businesses/resolving-complaint for further information on the status of your complaint.