Outcome at a glance
The Court substantially allowed the FCA’s appeal and dismissed the insurers’ appeals, resolving key coverage questions in the business interruption test case.
Allegations & issues
The parties disputed whether selected policy wordings covered losses caused by COVID-19 and the public-health response.
Key rulings & findings
The Court addressed disease, prevention-of-access and hybrid clauses, causation, and loss adjustments. Coverage depended on the particular wording and satisfaction of its requirements.
Admissions
This was a judicial interpretation of insurance contracts, not an admission of misconduct.
Disposition
FCA appeal substantially allowed; insurers’ appeals dismissed on 15 January 2021.
Penalties, damages & redress
The test-case appeal did not set a single compensation award for all policyholders.
Restrictions & obligations
No regulatory trading ban was the subject of this decision.
What the test case examined
The FCA brought the proceedings to resolve common questions about business-interruption policies following COVID-19 and public-health measures. The litigation considered sample wordings rather than assessing each business’s individual claim. The Supreme Court substantially allowed the FCA’s appeal and dismissed the insurers’ appeals. [1; 2]
The questions included disease clauses, prevention-of-access provisions, hybrid clauses and the causal connection between insured events and losses. An outcome favourable to policyholders under one wording did not mean that every policy covered every closure or reduction in trade. [1; 2, Background and Reasons]
Causation and calculation of losses
The Court addressed how local disease occurrences could combine with other cases to cause public-health measures. It rejected treating the wider pandemic as a reason automatically to defeat cover for the insured occurrence. Its reasoning depended on the wording and the nature of the insured peril. [1; 2, Causation]
It also considered trends clauses used to calculate lost revenue. Adjustments could not simply strip out the cover by treating effects of the same insured circumstances as an unrelated business trend. These principles guided subsequent assessment, but the appeal itself did not calculate a payment for every affected business. [1; 2, Trends clauses]
THE UNDERLYING RECORD
Primary sources
Read the full documents for their precise wording and context. Regulator summaries are identified separately from court records.
Court record · supremecourt.uk01 · Supreme Court · Connected appeal record and judgment ↗Court record · supremecourt.uk02 · Supreme Court · Press summary, 15 January 2021 ↗