Dundee FC have scored a vital victory in the High Court.
A test case brought by the Financial Conduct Authority (FCA) on behalf of organisations like the Dark Blues, who have business interruption (BI) insurance, has been successful.
The Dens Park club hope their policy will help protect them from the financial impact of the coronavirus and the legal ruling has now gone in their favour.
The High Court found in favour of the arguments advanced for policyholders on the majority of the key issues.
The decision, though, could be appealed.
Christopher Woolard, interim chief executive of the FCA, said: “We brought the test case in order to resolve the lack of clarity and certainty that existed for many policyholders making business interruption claims and the wider market.
“We are pleased that the Court has substantially found in favour of the arguments we presented on the majority of the key issues.
“Today’s judgment is a significant step in resolving the uncertainty being faced by policyholders.
“We are grateful to the court for delivering the judgment quickly and the speed with which it was reached reflects well on all parties.
“Coronavirus is causing substantial loss and distress to businesses and many are under immense financial strain to stay afloat.
“Our aim throughout this court action has been to get clarity for as wide a range of parties as possible, as quickly as possible and today’s judgment removes a large number of those roadblocks to successful claims, as well as clarifying those that may not be successful.
“Insurers should reflect on the clarity provided here and, irrespective of any possible appeals, consider the steps they can take now to progress claims of the type that the judgment says should be paid.
“They should also communicate directly and quickly with policyholders who have made claims affected by the judgment to explain next steps.
“If any parties do appeal the judgment, we would expect that to be done in as rapid a manner as possible in line with the agreement that we made with insurers at the start of this process. As we have recognised from the start of this case, thousands of small firms and potentially hundreds of thousands of jobs are relying on this.”
Many policyholders whose businesses were affected by the Covid-19 pandemic suffered significant losses, resulting in large numbers of claims under business interruption policies.
Most policies are focused on property damage and only have basic cover for BI as a consequence of property damage.
Some policies also cover for BI from other causes, in particular infectious or notifiable diseases (disease clauses) and non-damage denial of access and public authority closures or restrictions (denial of access clauses).
In some cases, insurers have accepted liability under these policies. In other cases, insurers have disputed liability while policyholders considered that it existed, leading to widespread concern about the lack of clarity and certainty.
The FCA’s aim in bringing the test case was to clarify key issues of contractual uncertainty for as many policyholders and insurers as possible.
The authority did this by selecting a representative sample of policy wordings issued by eight insurers.
The FCA’s role was to put forward policyholders’ arguments to their best advantage in the public interest. Approximately 370,000 policyholders were identified as holding policies that may be affected by the outcome of the test case.
A note of caution is that although the judgment will bring welcome news for many policyholders, it did not say that the eight defendant insurers are liable across all of the 21 different types of policy wording in the representative sample considered by the court.
Each policy needs to be considered against the detailed judgment to work out what it means for that policy but the test case has removed the need for policyholders to resolve a number of the key issues individually with their insurers.
In a club update to fans towards the end of last month, Dundee stressed the importance of a positive outcome.
They stated: “We await an update regarding our insurance policy and while this was always destined to be a long process it is still a frustrating wait.
“As previously stated we do not expect to see any initial payment on our current insurance quantum until the Financial Conduct Authority obtains a ruling from the High Court and that process is ongoing.
“The result of this hearing will determine the extent of liability the individual insurers have. We will look to update regarding refunds surrounding the 2019/20 season when we have more information from our insurance claim.”