Small struggling businesses being offered ‘derisory’ offers for Covid insurance claims
Struggling businesses are still waiting for vital Covid insurance payouts and many are being offered ‘derisory’ amounts well short of what they are owed, it has been revealed.
The Financial Conduct Authority’s latest figures show only 35,000 out of a potential 370,000 firms have had their business interruption claims settled four months after a Supreme Court ruling in their favour.
Now legal experts have lifted the lid on how many of the insurance companies are offering customers vastly smaller initial amounts when they finally respond.
Richard Conroy, from claims management firm Stratton Richards, says many of small businesses could lose out on tens of thousands of pounds if they don’t get the right support.
He said: “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.”
Mr Conroy’s views have been backed up by a leading barrister, who also highlighted the delays in customers receiving their payouts.
Robert 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.
“Three 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 Stratton Richards and their panel of solicitors, he secured an interim £28,000 cash lifeline.
Will said: “It’s obviously been a very tough time; there have been days when I thought I’d have to declare bankruptcy.
“I’ve had to deal with a lot of stress and lack of sleep as I’d be worrying about the future.”
The ex-soldier, 31, who served 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 so when lockdown came in I didn’t know how I’d be able to cope financially.
“I was desperate to do everything I could to support my staff and ensure the pub would be able to reopen when restrictions eased.”