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FCA examines fine print in pandemic insurance test case

23 July 2020

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Churches that rely on events and donations from the congregation and visitors have suffered financially during the lockdown

Churches that rely on events and donations from the congregation and visitors have suffered financially during the lockdown

CHURCHES are among thousands of businesses and organisations seeking clarity in the High Court this week on the legal basis of insurance cover for loss caused by a global pandemic. A test case brought by the Financial Conduct Authority (FCA) is examining the wording of policies on business interruption cover. As many as 370,000 policyholders could be affected by the result.

The eight insurers making legal submissions to the High Court include Ecclesiastical Insurance, the largest church insurer through its Parish Plus policies. The others are: Royal & SunAlliance, QBE, Arch, Argenta Syndicate Management, Hiscox, MS Amlin, and Zurich.

Ecclesiastical describes its own exclusion clause on “closure or restriction in the use of business premises due to the order of a competent local authority because of an occurrence of an infectious disease” as “clear and unambiguous”.

But at the start of proceedings, counsel for the FCA argued that, when insuring their businesses, people should not be susceptible to the insurer’s “picking and choosing” which elements to cover and which to exclude. Businesses had no option but to follow the Government’s rules.

A spokesman for Ecclesiastical said on Tuesday: “The court process aims to look at the wordings of over 40 insurers covering all sectors of society. As the largest church insurer, Ecclesiastical agreed to take part, as we wanted to engage positively with this process to help bring certainty and clarity to our customers as quickly as possible, and because we are a charity owned and ethical insurer.

“Our business interruptions policies were not designed to provide cover for pandemics, and have specific exclusions against infectious diseases like Covid-19 within them.

“We are acutely aware of the impact of the last four months on our church customers, and, during this period, our support to churches includes providing enhanced cover; an automatic extension in cover for 30 days beyond renewal to help protect customers from becoming unintentionally uninsured; and engaging with our customers where payments are challenging.

“We also hope that the Covid-19 risk advice that we are now providing to help churches reopen safely, gives them additional peace of mind.”

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