Business interruption: towards the multiplication of insured companies. Jérôme Goy’s tribune


Insurers won’t talk about it, but companies should be aware that there is only one month left before the statute of limitation expires for insurance claims related to business interruption. 

However, two court rulings in late 2021 expand the compensation possibilities for companies affected by covid, opening the primary guarantees of their policies. Until now, the “Covid” battle between insurance companies and their clients had focused on “extensions” of coverage related to administrative closures. But these extensions are rare, and their amounts are limited. The application of the main guarantees of the insurance contracts carries much more weight.

The first appeal ruling on this matter was issued on September 28, 2021, by the Court of Appeal of Angers and was reinforced by a ruling of the Commercial Court of Brest, in a case defended by our firm. They are of great significance. The Court’s ruling is a landmark decision for five companies. The Court considers that an “All Risks Except” insurance contract covers unanticipated risks, which dismisses the insurers’ argument that an unforeseen risk cannot be insured, or their business model will be jeopardized by the risk of bankruptcy.

The Court of Appeal and the Commercial Court affirmed that going concern is “insured property”. The courts also added that the pandemic and the administrative constraints caused damage to the clientele. Therefore, even if the company was not subject to an administrative closure, it may have suffered damage.

There are three practical consequences.

  1. More companies are covered

    By invoking primary guarantees, these rulings open the possibility of coverage for tens of thousands of additional companies. It is often thanks to the contracts drafted by brokers that their clients can obtain this type of guarantees.

  2. Increased coverage amounts

    The insurers’ actuaries have new difficulties to solve: the amounts of the main guarantees, unlike those of the extensions, are not limited, to the great benefit of the insureds

  3. The duration and the amount of the damages are extended

    The indemnifiable losses are no longer limited to lockdowns or closed companies: the losses can cover the entire duration of the crisis.

Insurers may face a large volume of claims in February. They are entering a zone of uncertainty. The subject of pandemic insurance was until now limited to specific clauses, with weak guarantees. From now on, the number of companies affected becomes more uncertain, and the amounts to pay could be much higher.

Insurers have not publicized this… because they have an effective weapon at their disposal: the two-year statute of limitation. It will invalidate all Covid claims that have not been properly interrupted, starting in March 2022.

There is still time!