Barrister warns businesses they risk missing out tens of thousands in insurance money without legal support
Business owners have been warned they face losing tens of thousands of pounds if they accept ‘derisory’ initial offers from insurers who previously denied them pandemic payouts.
In January, the Supreme Court supported the findings of a previous High Court judgment on the circumstances in which business interruption indemnities from the first coronavirus lockdown should be triggered.
The result of the test case, brought by the Financial Conduct Authority (FCA), is set to cost insurance companies around £2bn.
However, more than 1000,000 small firms are still waiting for the vital cash that could keep them in business until they are allowed to reopen.
And leading barrister Robert Skyner says many could lose out on large sums unless they have legal support.
Mr Skyner, joint head of chambers at 39 Park Square in Leeds, said: “The judgment of the High Court from September 2020 made it abundantly clear when and in what circumstances indemnity would be triggered under most business interruption policies.
“In January, the Supreme Court affirmed the findings of the High Court and again, in a very clear and easy to understand judgment, set out precisely the circumstances required for indemnity to be triggered.
“Two months have now passed since the Supreme Court judgment was handed down. The insurance industry has had more than enough time to digest the judgments, consider them and understand the obligations placed upon them as a result of the two judgments.
“Despite this we are seeing many instances of policyholders being told that they have no cover when that is simply not the case.”
Mr Skyner is among a group of legal experts assisting business owners in holding insurers to account.
He added: “We are seeing instances of policyholders being offered derisory sums – a one-off settlement in the sum of £1,000 when insured losses run into the tens of thousands.
“We are seeing instances where insurers are telling policyholders they have no duty to pay out on a policy of insurance, only for liability to quickly be established once the policyholder engages the services of specialist lawyers who are able to present their case robustly and challenge the insurer as to the correct interpretation of the Supreme Court judgement.”
One such policyholder is Will Farmer, owner of the The Dyke Alehouse pub in Brighton who was forced to shut the doors last March – just six months after taking over the community watering hole.
He was initially offered £1,000 by his insurers but after working with claims management firm Stratton Richards and their panel of solicitors, he secured an interim £28,000 cash lifeline.
This will allow his business to reopen this summer, with the potential for increasing the end settlement.
Will said: “It’s obviously been a very tough time; there have been days when I thought I’d have to declare bankruptcy.
“Like many people, I’ve had to deal with a lot of stress and lack of sleep as I’d be worrying about the future of my business and my own financial future, too.
“Now that I’ve secured the settlement from my insurers, I’m hoping to reopen in May and get going again.”
The ex-soldier, 31, who served on the frontline in Afghanistan and Iraq, had been paying around £150 a month for business insurance prior to the pandemic.
He added: “I thought they would cover me for losses during lockdown.
“Starting a new business is a huge investment to begin with, so when lockdown came in I didn’t know how I’d be able to cope financially.
“I still had rent to pay and several staff to support, and the furlough scheme still involves costs to the employer.
“I was desperate to do everything I could to support my staff and ensure the pub would be able to reopen when restrictions eased.”
Richard Conroy from Stratton Richards said: “Will’s story is one we’ve heard time after time – a small business owner who has struggled to get the financial support they are entitled to.
“Some insurers think they can offer derisory settlements and wash their hands of the issue but it’s simply not fair.
“Few of us could have foreseen an event such as the Covid-19 pandemic and the effects it would have on the economy, but that’s exactly why many small businesses take out insurance – to protect themselves from the unexpected.
“We want to make sure business owners have the confidence to take on their insurance company and get what’s rightfully theirs.”
Stratton Richards, regulated by the FCA, offers a free assessment of business insurance policies. If the business appears to have grounds in which to claim, their panel of solicitors will act on a ‘No Win, No Fee’ basis.