Widespread media coverage gave the impression that the decision was a significant outcome for large numbers of small businesses.
However, many sets of insurance policy wording were not covered by the scope of the Supreme Court ruling. This was particularly the case where wording was already deemed to be clear regarding exclusions of coverage relating to the COVID-19 pandemic. The impact of the decision will be felt more in relation to ambiguous policy wording, where insurers are now being told again to settle claims.
The BDA's assessment, based on previous survey work, is that most dental policyholders are not directly impacted by the FCA decision because claims for cover were excluded.
Some QBE policies were overturned in favour of the insured by the ruling, however again based on assessment of the market, we do not believe that many dental practices have those QBE policies impacted by that part of the decision. There are some dental practices insured by QBE, but the Court had already ruled in favour of the insured practices in those cases.
There are some positive aspects to the decision for those claimants with an established case:
- Insurers will now find it difficult to argue that they can reduce any loss that happened before lockdown, if that loss is because of a slow-down in activity relating to the COVID-19 pandemic
- Insurers cannot take any COVID-related issue into account in negotiating a payment
- Prevention from accessing premises now includes partial prevention from accessing premises. Some policies in the dental sector had wording that required there to be prevention of access.
In summary, most insured businesses (in dentistry and across the economy) did not have a legal route before the Supreme Court decision, and won’t have a claim afterwards. However, the position on damages is now likely to be more simple to calculate where businesses haven’t settled but where claims have been accepted.
We are working with lawyers Brown Rudnick to offer a further webinar to members outlining in more detail the implications of the ruling.