Yesterday saw the start of the FCA’s high profile test Court case against insurers on behalf of those businesses who have suffered non-damage business interruption losses caused by the COVID -19 pandemic.

Last week, eight insurers (“Insurers“) acting as defendants in the test case submitted two joint arguments, which warned that the FCA’s case “would lead to injustice, by imposing upon the defendants liability for losses they never agreed to cover“. The FCA published the Insurers’ arguments on its website on 15 July 2020.

The FCA has submitted that many small businesses that signed up to insurance policies to protect against closure by a public authority during an outbreak of infectious disease were unsophisticated buyers. Accordingly, they could not be expected to understand complex legal principles now been advanced by insurers.

The Insurers have disputed this, arguing that many businesses received advice from brokers when entering into those policies, and as such, were likely to be “reasonably aware of the operation of insurance law.”

The Insurers also allege that the FCA’s case attempts to circumvent established legal principles of causation, which are applied when determining losses, for a common-sense test instead. The Insurers argue that this is “heretical“, and that “the court should reject the FCA’s invitation to embrace what amounts to a set of heterodox, unprincipled propositions with potentially far-reaching and unpredictable results.”

We have been reporting on the development of this dispute since the start of lockdown. If you would like to read more on the story, click here.