Many policyholders will have been celebrating after the Supreme Court ruling on insurance contract wordings went substantially in their favour.  While this may offer hope to SME’s, the ruling may not be the solution for all situations for a number of reasons:

  • Policies have slightly different wordings and only a selection of specific examples were considered.  You need to read your policy carefully and speak to your broker to see if it covers you for losses arising from COVID-19.


  • For a claim to be accepted, policyholders need to show that they have suffered a loss and quantify it.  This will be easier to prove for some industries than others.  A number of government grants (CBILS, SEISS, rates relief, local authority to name a few) will have helped tide many over and SMEs may need their accountants to help crunch the figures.


  • Hospitality, leisure and manufacturing operations that have had to close for long periods or substantially curtail their business operations will have significant reductions in turnover, and profit, compared to the previous years.


  • It may be less clear cut for professional services firms, such as accountants and lawyers, who have adapted to allow staff to work from home, incurring some costs but often with little reduction in turnover.


It is worth noting that claims will be met from insurers reserves but all policyholders, including those substantially unaffected by COVID-19, could see premium increases in future years as insurers recover their losses.


This is only the first step for many policyholders and there may be more work to be carried out before any cash arrives in your bank account.