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Law360, London (May 22, 2020, 8:08 PM BST) -- Insurance law firm Edwin Coe LLP said it has established two groups to pursue business interruption claims against insurers RSA and Hiscox, amid growing hunger for litigation in the wake of the U.K.-wide lockdown.
Edwin Coe said the insurers were "reneging" on their contractual requirements to small businesses, which had threatened their survival during the pandemic. There are 250 to 300 claimants in the RSA group and 62 in the Hiscox group, the firm said on May 19.
In recent weeks, there has been a surge in the number of law firms setting up groups to pursue claims on a collective basis against insurers over refusals to pay out on policies.
Edwin Coe already has a group for Allianz policyholders, while Mishcon de Reya LLP has a group pursing action against Hiscox and another seeking damages against QBE and Aviva.
"Unfortunately, in many cases claims have been denied because of arguments based on ambiguous policy wordings and weak legal precedent," Roger Franklin, head of insurance litigation at Edwin Coe, said. "We aim to challenge those arguments as quickly and cost effectively as possible so that businesses can survive in these trying times."
Hiscox said its policies, like many others in the industry, did not cover losses from pandemics. A spokesperson for RSA did not immediately respond to a request for comment.
Business interruption insurance normally only covers losses where a company is forced to shut due to property damage. There are a number of extensions that can be added to cover to guard against losses from closures resulting from an infectious disease outbreak.
"While it is correct that a lot of commercial insurance policies do not provide cover for losses caused by COVID-19, a lot of them do," Franklin said. "Hiscox is one such example."
The Financial Conduct Authority is preparing to take a handful of representative policy wordings to the High Court in July to get a judgment over whether insurers are required to pay out claims.
The FCA said its case would not prevent groups or individuals from pursuing their own legal cases.
--Editing by Alyssa Miller.
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