’We have recently issued and served group action proceedings,’ says law firm
NFU Mutual is locked in an ongoing legal battle with dozens of policyholders who allege that the insurer refused to pay their claims after being forced to lockdown during the Covid-19 pandemic.
The group action involves 37 claimants made up of farm operators, which also run hospitality operations such as campsites and wedding venues.
They claim their business interruption policies should have paid out when they were forced to close their operations during the lockdowns.
And the group felt that NFU Mutual should be liable to indemnify each of the policyholders, as well as damages for breach of contract, breach of implied terms, interests and costs.
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Penningtons Manches Cooper is representing the group action.
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A spokesperson from the law firm told Insurance Times: ”For many businesses, the coronavirus pandemic and lockdown measures resulted in a significant loss of income and a large number of insurers have to date still declined to pay claims under their business interruption insurance policies.
“We have recently issued and served group action proceedings on behalf of an initial group of 37 affected businesses against NFU Mutual relating to unpaid Covid-19 business interruption clams.”
If the case goes against NFU Mutual, it faces claims running into millions of pounds.
Colin Hayes, senior associate at the law firm, said: “Our clients, along with many other policyholders, incepted a policy with NFU Mutual in good faith, which covered them against incidents where access to their premises was restricted by a public authority.
“This group action provides a means for NFU Mutual policyholders to reclaim the money they believe they are rightfully entitled to have been paid.”
An NFU Mutual spokesperson said: “We have received correspondence from Pennington Manches Cooper, who have served legal proceedings on behalf of a small group of our customers.
“In the FCA’s test case into business interruption, the High Court found that policy wordings similar to NFU Mutual’s do not cover the pandemic and the restrictions that followed. Therefore, the judgement did not trigger cover for customers with our ’hospitality endorsement – action of competent authority’ extension.
“The High Court’s finding that the pandemic could not be considered an ‘incident’ was not appealed to the Supreme Court and so we believe it remains the correct legal position.”
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