English Court to Provide Guidance on Whether Common UK Insurance Policy Wordings Cover COVID-19 Claims
The UK Financial Conduct Authority ("FCA") has asked the English High Court to give an urgent declaratory judgment to address "significant uncertainty" on the scope of common business interruption insurance policy wordings in the UK market and whether they apply to COVID-19-related losses. The Court is also asked to consider the extent of covered losses under certain insurance extensions and other coverage clauses. While there are ongoing disputes between policyholders and insurers regarding whether COVID-19 causes physical loss or damage (for policies containing such cover), the FCA's legal action ("Test Case") focuses on addressing a number of sample policy wordings that are not triggered by physical loss or damage to property. The Court will also not decide issues relating to the measure of damages payable to individual policyholders or specific types of application. In the interim, the FCA has issued Guidance requiring all insurers to check their policy wordings against those in the Test Case to identify if their policies would be impacted by the outcome of the case. The Test Case will be heard in July 2020.
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