The founder of one of the West Midlands’ most innovative restaurant groups has joined forces with hundreds of businesses fighting insurance companies that are refusing to pay out on business interruption (BI) policies due to the coronavirus pandemic.
Jabbar Khan, founder and director of the Lasan Group, said by shirking their responsibilities, insurance companies were compelling the Government to introduce a raft of initiatives to save businesses, at the tax payers’ expense.
He said if insurance companies had agreed to pay out on BI claims to those businesses that had a legitimate claim, it would have helped to safeguard hundreds of businesses across the country.
He has now appointed Rubric Lois King (RLK) to challenge insurance companies that insist the coronavirus pandemic is exempt from the existing BI policies.
“Our insurance company was happy to take the money for our premiums and now it is now evading its responsibilities,” said Mr Khan, who runs Lasan, Raja Monkey and Fiesta del Asado in Birmingham and Solihull.
“Businesses such as ours did the right and responsible thing by taking out adequate insurance cover that covers all eventualities, but when the worst happens, we find ourselves unprotected.
“What we have instead is the Government having to introduce grants, VAT reductions and rate relief, on top of other measures, to save businesses from collapsing, when the insurance company pay out could have gone a long way to safeguarding their businesses.”
His plight has been taken up by the law firm, which is working on a no-win, no-fee basis with its clients, to fight the insurance companies.
A test case is already underway in the High Court after the Financial Conduct Authority took Europe’s largest insurers to court to establish if they should pay out on pandemic-related claims.
If the courts decide that the insurance companies are wrong, the ruling could mean tens of millions of pounds in additional claims.
Chris Guy, solicitor at the Edgbaston-based firm, said: “We estimate that as many as a quarter of businesses across the UK have a policy that will allow them to claim on their business interruption insurance, but insurers are putting barriers in place, claiming the wordings on their policies should not apply to pandemics or notifiable diseases.
“These businesses have been hard hit by the coronavirus pandemic and the lockdown, which forced them to close their doors or drastically reduce their operations, but insurers have been obstinate in denying their policyholders what they – and we – believe they are entitled to.
“The main issue is around ambiguous and varying wording in the policies, but we believe the companies we are working with have a strong case. We would urge any business in any sector that is fighting its insurance company on the business interruption policy to get their claim examined by a legal team with expertise in this highly complex area.”
RLK has reviewed the policies of thousands of businesses and has already agreed to represent 300 businesses, including those in hospitality, hair and beauty, and estate and wealth management sectors. It continues to plough through hundreds more applications to establish if the companies have a chance winning a legal challenge.
The law firm has also engaged the services of members of Birmingham-based 3PB Barristers to assist on the cases.
Business interruption insurance provides cover for financial losses if there is interruption due to damage to property, such as fire or flood. However, some insurance policies also cover interruptions caused by non-damage denial of access, notifiable diseases and restrictions imposed by a public authority.
“The process for checking if they have a potential claim is easy,” said Mr Guy. “We just need is a copy of a company’s insurance schedule and policy so that our expert team can review it to determine if there is a case to answer.”
To find out if a company is eligible to claim on its business interruption policy, click here.