Insurance

Small businesses face waits of up to six months to receive insurance payouts covering losses brought on by the Covid-19 pandemic.

Last September, the High Court ruled that small stores suffering a reduction of trade due to Covid-19 closures could claim for losses, subject to policy limits.

The companies included in the case were Arch Insurance, Argent Syndicate Management, Ecclestical Insurance Office, MS Amlin Underwriting, Hiscox Insurance Company, Royal & Sun Insurance and Zurich Insurance.

However, last week, Capital Law’s senior lawyer, Catrin Povey, told Retail Express that getting a payout remains a “waiting game”, despite the Financial Conduct Authority ordering firms to pay compensation at the “earliest possible date to support businesses”.

Insurance providers ordered to pay stores for Covid losses

“The courts are really backed up and it’s taking a while to get decisions through,” she said. “I expect this to be the case for at least another six months. Out of 100 cases we are dealing with, we have only reached a final decision for one.”

As a result, Povey revealed some business owners have given up. “We’ve had clients who can’t be bothered to keep pushing because it’s so time consuming,” she said. “It’s understandable when retailers have had other priorities since reopening post-pandemic, like wanting to make money that they have lost.”

When asked what stores can do to better their chances of reaching an outcome sooner, Povey urged them to continue gathering evidence.

“Some retailers who’ve had to prove Covid-19 was on their premises as a reason for closing have been able to obtain text messages between customers proving they were experiencing symptoms,” she said.

“Putting out messages on social media has been useful for them. The Financial Ombudsman said it’ll take this as a form of evidence. I advise retailers to keep conversations going with customers as much as possible.”

Find out more on our coronavirus information hub for retailers