Legal lifeline for businesses refused critical coronavirus pay out

Michelmores is inviting businesses whose claims have been declined to help in the legal fight

The London-based insurance team of a South West law firm is considering taking legal action against a number of insurers after Business Interruption claims, due to the coronavirus pandemic, have been declined.

Michelmores specialist policyholder Insurance Team is considering launching a series of group actions on behalf of businesses affected by the coronavirus pandemic as many have had to shut for months leaving them out of pocket.

It has been found that some insurers have been declining Business Interruption claims during this time, much to the dismay of businesses trying to keep afloat.

The firm is now inviting expressions of interests from businesses whose claims have been declined to join a group action.

Garbhan Shanks, Head of Michelmores' policyholder insurance team, said: "The coronavirus pandemic has adversely affected numerous businesses across the United Kingdom.

"Whilst many unfortunately have no cover, through acting for various policyholder clients over the last few months to advance claims against their insurers, we have identified some specific policy clauses (such as non-damage property business interruption or disease extension wording, in particular with 25 mile radius requirement) which should cover business interruption losses due to Covid-19, yet the insurers who offered this cover are declining claims.

"We are considering launching a series of targeted group actions, with the aim of helping policyholders to receive the indemnity funds that they may be entitled to."

Group actions are typically funded by third party litigation funders who will pay for all the legal costs, and any adverse costs insurance, in return for a certain share of any damages awarded, should litigation or arbitration be necessary.

Mr Shanks added: "There has been a painful Mexican stand-off with various insurers refusing to budge in their position, no doubt for fear of opening the floodgates.

"Some businesses in the meantime are on their knees and irreparable damage will be caused for some if they do not receive the lifeline they are contractually entitled to."

"Not only will insurers risk facing legal action, but by dragging their feet, they will face additional claims for damages arising from the delay in paying out."

Michelmores is also liaising with the FCA about certain policy terms which the firm wishes to see clarified by the High Court in its declaratory judgment.

If your business has Business Interruption insurance and you would like to register your interest in a potential group action, please visit the website, here. If one of the insurers listed is one your policy is registered with, please then email the Michelmores team at insurance@michelmores.com and provide the following details:

· Name of policyholder

· Name of insurer

· Copy of Insurance Policy if available

All information provided to the team at Michelmores will be kept confidential.

For more information, visit the Michelmores website, here.