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COVID-19 and Business Interruption Insurance: A View of the British Decision

January 19, 2021
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The decision by the United Kingdom's Supreme Court upholding a High Court of Justice ruling that insurers must indemnify their policyholders for COVID-19 business interruption losses is now a prominent insurance news story worldwide.

The first point to make is British insurers use different policy forms than American insurers. Most American courts have ruled in favor of insurers excluding coverage, and the U. S. Supreme Court will most likely follow those rulings.

In an analysis by an Australian lawyer, Mark Sheller, he notes the principle is causation and whether it is covered by policy terms. There was a difference between the High Court's finding that COVID-19 was the insured peril, while the Supreme Court limited it to COVID-19 within a specified radius. Neither court accepted the insurers' argument that coverage did not apply; apparently the policies did not specifically exclude viruses.

Both in Britain and other countries this decision will probably result in more strictly defined terms of business interruption coverage.