COVID-19 Business Interruption Claims in the UK: September 2025 Update

H & H Associates Insight

The FCA Test Case: Legal Baseline

In January 2021, the UK Supreme Court handed down its landmark judgment in the FCA business interruption test case (FCA v Arch & others). The Court clarified how non-damage BI policy wordings should be interpreted for COVID-19 restrictions. This decision unlocked thousands of potential claims for SMEs and larger businesses and still sets the legal foundation for BI litigation in the UK.

Current Market & Legal Status (2025)

Although insurers have settled many COVID-19 BI claims, significant disputes continue:

• Furlough deductions under review
  The Court of Appeal ruled in Bath Racecourse v Liberty Mutual (February 2025) that furlough payments can be treated as “savings” and deducted from BI payouts. The Supreme Court has now granted permission to appeal, and its decision could affect thousands of outstanding claims.

• Composite policies clarified
  The Court of Appeal also held that, unless policies state otherwise, indemnity limits apply separately to each insured entity under a composite policy. This may increase potential recoveries for multi-entity groups.

• Ongoing litigation
  Higher-value disputes continue, including appeals to the Supreme Court. Regional court rulings, such as in the ExCeL Centre case, show that outcomes can expand policyholder cover.

• Limitation deadlines approaching
  Many claims are subject to the standard six-year limitation period, meaning that by March 2026, a large proportion of pandemic-era BI claims risk being time-barred if legal action has not been taken.

• Complaints & regulatory process
  The Financial Ombudsman Service and the FCA continue to handle complaints and issue guidance. Policyholders are expected to follow fair complaints procedures before or alongside litigation.

The Role of Forensic Accountants

At H & H Associates, we see forensic accountants playing a central role in BI claims:

• Quantifying loss – Building transparent models of lost turnover, gross profit, and increased costs.

• Causation & counterfactuals – Establishing “but-for” trading scenarios to separate insured losses from unrelated business fluctuations.

• Evidence management – Collecting and interpreting contemporaneous business records, EPOS data, invoices, and communications.

• Adjustments – Assessing whether furlough payments, grants or reliefs should be deducted, a question now at the centre of Supreme Court litigation.

• Expert reports – Preparing independent expert evidence for courts, arbitrations, or negotiations.

• Settlement support – Helping clients and legal teams model and negotiate optimal settlement outcomes.

Practical Guidance for Policyholders

• Act early – Do not delay. With the March 2026 limitation deadline looming, businesses should seek advice now.

• Review policy wordings – Subtle differences in clauses can dramatically affect cover.

• Engage expertise – Early input from forensic accountants can strengthen claims, preserve evidence, and improve litigation outcomes.