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    Non-property damage business interruption cover (non-damage BI cover) and FCA test case

    In May 2020, the FCA announced its intention to bring a test case in the High Court of England and Wales to seek legal clarity about the meaning and effect of selected Business Interruption insurance policy wordings in relation to losses resulting from the COVID-19 pandemic.

    A judgment in the test case was handed down by the High Court on 15 September 2020. The judgment was appealed directly to the Supreme Court and the Supreme Court's judgment was handed down on 15 January 2021. There is no right of appeal from the Supreme Court. Its judgment therefore represents the final outcome in the test case.

    SCOPE AND EFFECT OF THE TEST CASE

    A test case is a helpful way of obtaining a legal ruling on a point of law or interpretation in one court case, which will then give guidance to others beyond the parties involved in the test case.

    The aim of this test case was for the courts to determine the interpretation of certain policy provisions that include cover for non-damage (i.e. no physical damage to property) Business Interruption. The test case does not concern policies which only have damage based cover. Furthermore, it is confined to the issues which arose on clauses in the selection of policies chosen for the test case.

    The clauses providing cover fell into three broad categories:

    1. Clauses providing cover in the event of disease within a specified area;
    2. Clauses providing cover for actions of public authorities and/or closure of business premises;
    3. Hybrid clauses providing cover for a combination of 1 and 2.

    For differing reasons, the High Court and the Supreme Court found that cover for COVID-19-related business interruption losses will arise on the majority of the specimen wordings considered.

    CNA Hardy was not a party to the test case and its policies were not therefore considered in it. However, the test case was intended to provide authoritative guidance to assist insurers and policyholders in relation to claims for losses resulting from the COVID-19 pandemic.

    During the course of the test case proceedings, CNA Hardy wrote to policyholders who had submitted relevant claims potentially affected by the test case before its final outcome to inform them of the position and to provide relevant information about the case.

    CNA HARDY'S CLAIMS DECISIONS

    CNA Hardy understands that this is a difficult time for its policyholders who have been affected by the COVID-19 pandemic. We are committed to paying claims as quickly as possible where there is cover under the a policy. Where we conclude that there is cover for a claim having regard to the developments in the law in the Supreme Court's judgment, we will contact policyholders in relation to payment of their claims.

    However, many of CNA Hardy's policies providing business interruption cover do not respond in the circumstances, for example, where disease cover is provided on the basis of an exhaustive list of diseases not including COVID-19 or where cover requires closure of business premises but the premises in question did not fall within a category required to close.

    In all cases, we seek to advise policyholders of our final decisions regarding policy coverage as soon as we are in a position to do so.

    I HAVE SUBMITTED A COMPLAINT TO YOUR COMPLAINTS TEAM, WHAT WILL THEY NOW DO?

    If you have received a final decision letter following your complaint, where the wording of your policy is relevant to the test case, we will write to you to confirm that we will reconsider your claim following the outcome of the test case.

    If we have not yet responded to your complaint and the wording of your policy is relevant to the test case, we will write to you to say that unfortunately we have to put your complaint on hold until the outcome of the test case.

    If the wording of your policy is not relevant to the test case we will continue to handle your complaint in accordance with our complaint handling procedures.

    If you have received a final decision letter following a complaint you made and the wording of your policy is not relevant to the test case, this remains our final decision.

    WHAT IF I AM STILL NOT HAPPY WITH THE FINAL DECISION ON MY CLAIM?

    You are able to complain to us and we will review this in line with our complaints handling procedures

    You can also find information for small businesses from the Financial Ombudsman Service here:

    sme.financial-ombudsman.org.uk/

    Please note that if you are an eligible complainant (as defined by the rules of the Financial Conduct Authority - please see www.handbook.fca.org.uk/handbook/DISP/2/7.html) then you can contact the Financial Ombudsman Service at www.financial-ombudsman.org.uk/consumers/how-to-complain

    WHO CAN I CONTACT AT CNA HARDY IF I HAVE A QUESTION? 

    Please email [email protected] and we will endeavor to respond to your question as soon as we can. Please include details of your policy number in addition to your question

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