Supreme court insurance ruling is a watershed moment - but it’s come too late for some

It was a ruling that could be a lifeline for many small businesses, but came too late for others.

The Supreme Court today has passed down a judgement which means insurers will likely have to pay out to roughly 370,000 businesses which have been impacted by the Covid-19 pandemic.

Following the ruling, policyholders can now claim for losses caused by the government’s directive to close their businesses, despite the fact that the law mandating such action only came into effect later on.

Chief executive of Broadway Insurance Brokers, Daniel Lloyd-John, called the ruling “a watershed moment” for the insurance industry which now presented the sector with “the biggest challenge it’s faced in many generations.”

One of the most striking elements is the speed with which this case has made its way through the courts, from being filed to a ruling from the Supreme Court in a matter of months.

The Financial Conduct Authority also deserves credit for bringing the test case last year over the wording of insurance policies.

Without this intervention, many small businesses would have had to individually wade through months of wrangling with their insurance providers over the same issue.

The reality remains however that this ruling, which unlocks £1.2bn, has come too late for some businesses. Payouts have been held up for months, and companies without cashflow have been forced to close.

There is still legal wrangling to go - firms will have to go through their policies line by line and may have to seek further legal advice to get the level of payout they expect.

But this judgement provides much need clarity for businesses who have been battered by the pandemic and repeated lockdowns.