A York hotel owner is one of dozens of business owners in the region fighting insurance companies that are refusing to pay out on business interruption (BI) policies due to the coronavirus pandemic.
Jeremy Cassel, managing director of The Grange, said the blocking of business interruption payouts has made a bad situation for the business even worse.
He has now appointed Rubric Lois King (RLK) to challenge insurance companies that insist the coronavirus pandemic is exempt from the existing BI policies.
Mr Cassel said bookings for the 40-room boutique town house hotel, in Clifton, started to drop off in February, when the first two cases of Covid-19 were reported in the city. A month later, when lockdown was announced, the hotel had to close and furlough 47 of the 50 staff.
“I thought we would be covered by our business interruption policy, which even states that claims for the plague can be made,” he said. “I had no reason to think otherwise, and my insurance broker thought similarly. However, I became very concerned when she came back to us and said the insurers were refusing the claim.
“I strongly believe we have a case and so does our solicitor. Despite the fact that the hotel was closed, we had bills and other expenses to pay, and there is only so long that can be maintained when there is no cash coming into the business.”
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 billions 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 already acts for more than 300 businesses, including those in hospitality, hair and beauty, estate and wealth management sectors. It continues to plough through hundreds more applications to establish if the companies have a chance of winning a legal challenge and has engaged London-based 3PB Barristers to assist in 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 a copy of a company’s insurance schedule and policy wording 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.