A test case to resolve uncertainty over the validity of ‘business interruption insurance’ policies could be a “game changer” for travel agencies, according to The Advantage Travel Partnership.
The Financial Conduct Authority (FCA) is taking action on behalf of policyholders to gain clarity on whether business interruption claims cover the impact of the Covid-19 pandemic, with a hearing due in the second half of July.
Business interruption insurance protects businesses against financial loss as a result of a property claim. Most standard policies state there must be physical damage to insured premises for a claim to be made, but some include ‘special extensions’ relating to notifiable human diseases.
The test case will focus on policies that could be argued to include cover for business interruption caused by Covid-19.
The FCA said a large number of claims were being made and there was “widespread concern” about “the lack of a positive response” from insurers and “the basis on which some insurers are making decisions in relation to claims”.
Advantage’s head of business development, David Moon, said: “Without doubt this case could be a game changer for a lot of agents. It will bring clarity as to whether there is potential for a claim.
“The last thing agents need now is lengthy conversations with insurance companies.”
Bailey’s Travel owner Chris Bailey lodged an unsuccessful claim at the start of lockdown. He said: “I was told you have to prove the disease is on the premises, but it’s on our premises as much as it’s on the market square outside.
“The reason we’ve shut and suffered loss of income is because Covid-19 is present in the community.”
He added: “This hearing could be the saviour.”
Westoe Travel owner Graeme Brett said the outcome could affect many high street agents. He said: “We are waiting to see what happens in this case. There should be a coordinated industry response.”
Gemma Antrobus, owner of Haslemere Travel and chair of Aito Agents, said: “There could be grounds for making a claim via consortia or as a group.”
