Jurisdiction(s):
United Kingdom

COVID-19 business interruption insurance: Court of Appeal (England and Wales) upholds furlough deductions but confirms per‑subsidiary indemnity limits under composite policies

Published on: 25 February 2025

Published by a Law360 reporter

Legal News

Article summary

The Court of Appeal held that a ‘reasonable policyholder’ would recognise that firms supported by the state furlough scheme did not have to meet their own payroll and, as a result, ought not to receive indemnity for those losses. However, the judges found for policyholders on a distinct point in the test case concerning so‑called composite insurance policies. The court handed down a split decision three weeks after the hearings, which ran from 21–28 January 2025. It ranks among the biggest test cases on the fraught question of COVID‑19 business interruption cover since the Financial Conduct Authority prevailed against eight insurers on policyholders’ behalf in 2021. In the judgment, Justice Julian Flaux explained that, ultimately, the insureds did not have to carry the cost of wages and, to that extent, the business’s charges or expenses were reduced. The decision was endorsed by Justices Andrew Popplewell and Stephen Phillips...

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