When making a business interruption claim, unexpected disruptions can significantly impact your business operations and finances. These unforeseen events, from natural disasters to equipment failures, often hinder revenue generation, leaving many small business owners vulnerable. This is where business interruption insurance comes in, offering a safety net to protect your financial stability and ensure business continuity.
This guide will thoroughly understand business interruption insurance, key considerations before filing a claim, and actionable steps to successfully submit your claim. You’ll also learn important tips and recognise common challenges to achieve the best outcome for your business.
Court of Appeal Upholds Ruling in Favor of ExCeL Centre
In September 2024, the Court of Appeal rejected appeals from insurers and upheld a previous ruling in favour of London’s ExCeL Centre. The case centred on the interpretation of “at the premises” clauses in various insurance policies. This decision could have significant implications for thousands of businesses affected by the COVID-19 pandemic.
Welsh Bar Wins £1.5m Insurance Claim Appeal
In September 2024, a bar in Aberystwyth, Wales, won a legal case concerning an insurance claim valued at approximately £1.5 million for losses suffered during the COVID-19 lockdowns. The Court of Appeal determined that the Why Not Bar, along with five other policyholders participating in this test case, is eligible for compensation.
Ongoing Litigation and Settlements
As of January 2025, several high-profile cases are still pending in the Court of Appeal. These include appeals related to the Bath Racecourse & Ors v Liberty Mutual case and an appeal by policyholders to determine whether insurers are entitled to deduct furlough payments from indemnities. These cases are expected further to shape the landscape of COVID-19 business interruption litigation.
In December 2024, it was reported that Premier League football clubs Arsenal FC and Liverpool FC agreed to settle their lawsuit against major insurers, including Allianz, Aviva, CNA Insurance, Zurich, and Liberty. This settlement follows similar agreements reached by other clubs earlier in the year.
Business interruption insurance, also referred to as “business income insurance” or “business disruption insurance,” compensates you for the loss of income your business experiences due to unexpected events. While the specifics can vary by policy, most cover the following key areas:
However, it’s equally important to understand what these policies don’t cover. Common exclusions include losses due to non-physical damages—such as cyberattacks or reputational issues—and any interruptions that are not tied directly to an insured peril (e.g., fire, flood, or theft).
The indemnity period refers to the time frame during which your insurer will reimburse your business for its losses. It begins from the date of the insured event and typically ends when your business has either resumed normal operations or reached a pre-agreed time limit, whichever is sooner. It’s important to ensure the indemnity period stated in your policy aligns with the time needed for full recovery.
Understanding your policy’s scope and limitations thoroughly ensures that you are prepared to file a claim effectively.
What Oakleafe Clients Say:
Book your complimentary consultation with our insurance claim professionals.
Our insurance claim professionals will explain the claim process to ensure you understand your options.
Business interruption insurance, also referred to as “business income insurance” or “business disruption insurance,” compensates you for the loss of income your business experiences due to unexpected events. While the specifics can vary by policy, most cover the following key areas:
However, it’s equally important to understand what these policies don’t cover. Common exclusions include losses due to non-physical damages—such as cyberattacks or reputational issues—and any interruptions that are not tied directly to an insured peril (e.g., fire, flood, or theft).
The indemnity period refers to the time frame during which your insurer will reimburse your business for its losses. It begins from the date of the insured event and typically ends when your business has either resumed normal operations or reached a pre-agreed time limit, whichever is sooner. It’s important to ensure the indemnity period stated in your policy aligns with the time needed for full recovery.
Understanding your policy’s scope and limitations thoroughly ensures that you are prepared to file a claim effectively.
What Oakleafe Clients Say:
Book your complimentary consultation with our insurance claim professionals.
Our insurance claim professionals will explain the claim process to ensure you understand your options.
Before initiating a business interruption claim, it’s essential to evaluate the following:
Begin by reviewing your business interruption policy to understand coverage limits, applicable exclusions, deductibles, and the indemnity period. Ensure the interruption’s cause, or the “triggering event,” qualifies under your policy’s terms.
Did a fire cause your disruption? Flood? Equipment breakdown? Ensure the cause aligns with the insured perils specified in your policy. Events not listed in your coverage may make your claim ineligible.
Calculate the estimated financial impact of the interruption. This includes lost revenue, ongoing expenses, and any additional costs required to mitigate further losses. Accurate quantification will significantly strengthen your claim.
Taking these steps ensures you approach the claims process clearly and quickly.
Once you’ve prepared, here’s a step-by-step process to file your business interruption claim:
Step 1: Notify Your Insurer Promptly
Contact your insurer as soon as an insured event occurs. Delays in notification may lead to complications or even denial of your claim.
Step 2: Document the Loss
Gather as much evidence as possible to substantiate your claim. This includes:
Step 3: Complete Claim Forms
Provide all required information on the claim forms, ensuring accuracy and completeness. Mistakes or omissions can result in delays.
Step 4: Cooperate with the Investigation
Your insurer may assign an adjuster to evaluate your claim. Be cooperative and responsive during this phase and provide any additional documentation promptly.
Step 5: Maintain Open Communication
Check in regularly with your insurer to monitor the progress of your claim. Keep records of all correspondence to create a paper trail.
These steps guide you towards submitting a comprehensive and persuasive claim, maximising your chances of approval.
Understanding how to calculate losses strengthens your claim and provides clarity on your financial needs. Here’s how you can assess the financial impact of an interruption:
Accurate calculations are crucial for submitting a claim that truly reflects the financial damage caused.
While filing a claim is straightforward in theory, real-world challenges can arise, such as:
Awareness of these challenges empowers you to approach the process with realistic expectations.
Filing a claim may also require navigating certain legal and regulatory intricacies. To stay compliant:
Demonstrating compliance and awareness of legal requirements positions you as a prepared and credible policyholder.
To improve the likelihood of a favourable claim outcome, follow these practical tips:
Tip 1. Maintain Detailed Records
Document all financial and operational information before, during, and after the disruption.
Tip 2. Communicate Clearly with Your Insurer
Be transparent, cooperative, and prompt in all interactions.
Tip 3. Engage Professionals
Enlist the help of accountants, insurers, and legal experts to refine your claim.
Tip 4. Be Proactive in Mitigation Efforts
Take reasonable measures to reduce losses, as most policies require this.
These practices demonstrate diligence and preparation, earning the confidence of your insurer.
Business interruption insurance can be a lifeline, but the claims process requires effort, organisation, and knowledge to achieve the best outcome. You can safeguard your business’s continuity by understanding your policy, keeping accurate records, and proactively managing communication with your insurer.
If you feel overwhelmed, seek tailored advice from a professional. Remember, the key to success lies in being informed and diligent at every stage.
Oakleafe Claims have represented policyholders and managed their insurance claims since before the First World War. We have vast expertise and experience in both domestic and commercial insurance claims with thousands of satisfied policyholders who have received their deserved insurance settlement. With no upfront fees required, our internal data shows that insurance claims managed by professional loss assessors like Oakleafe can expect a settlement up to 40% higher than claims managed by the policyholder.
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