Covid-19 related business interruption claims – FCA test case

On 15 September 2020 judgment was handed down in The Financial Conduct Authority v Arch Insurance (UK) Ltd [2020] EWHC 2448 (Comm); [2020] Lloyd’s Rep IR 527, a test case on the meaning of cover for business interruption losses independent of physical damage. The judgment provides valuable guidance for how insurers are to assess claims arising in the context of the Covid-19 pandemic, and actions by the authorities associated therewith.

Typically, a policy that insures business interruption (BI) losses is triggered by a loss of profit that follows some physical damage to the property insured. The word “physical” refers to something tangible with material existence and “damage” is shown when the physical integrity of the property is altered. ¹