Insurers ‘wash their hands’ of Sheffield cafe hit by pandemic

Tim Nye of Marmadukes says he has paid thousands for cover over the years only to be turned down in his hour of need.

He believes Churchill should ’step up’ at a time of national crisis and abide by a recent Supreme Court ruling that established the principle of insurers paying out in cases like his.

Mr Nye runs two cafes in Sheffield city centre and employs 50.

He says the business has survived with support from investors, suppliers, Sheffield City Council and government loans and grants - but not their insurer.

He added: “I don’t know how they sleep at night. They seem to have completely washed their hands of small businesses just when they need them most.

“Covid is not listed on my insurance policy because it is too new. But I bought the cover in good faith and Churchill should honour the spirit of it.

“It’s galled me. We’ve had to take taxpayer-funded grants. But they’ve hidden behind platitudes and reverted to type to make it as difficult as possible for people.

“Insurers could make a difference to thousands of firms like mine. But they’re walking away from this without having been bloodied at all.”

Mr Nye said he was covered for up to £250,000 of business interruption. But after a year of restrictions and closures the business had lost much more than that.

A spokesman for Direct Line Group, which owns insurer Churchill Expert, said the Supreme Court ruling had no impact on Mr Nye’s policy and he wasn’t covered.

He added: “Policies arranged by Churchill Expert were not included in the FCA’s test case and are not impacted by the outcome of The Supreme Court ruling on business interruption.

“Our standard commercial policies provide cover for business interruption for a list of specified diseases. In addition, any claim for denial of access requires there to have been physical damage to property in order for the policy to provide cover.

“As regards any potential claims for closure by a public authority there is an exclusion for infectious or contagious disease.”

“Consequently, irrespective of the Supreme Court ruling, there is no cover for business interruption for the Covid-19 pandemic.”

Last month, the Supreme Court substantially ruled in favour of the Financial Conduct Authority in a test case for coronavirus-related disruption.

The FCA said the judgment ended legal arguments over 14 types of policy issued by six insurers, and a substantial number of similar policies in the wider market, which would now lead to claims being successful.

The landmark case is estimated to be worth £1.2 billion and could affect around 370,000 businesses.

At the time, Sheldon Mills, executive director, consumers and competition at the FCA, said it ‘removes many of the roadblocks to claims by policyholders’.

He added: “As we have recognised from the start of this case, tens of thousands of small firms and potentially hundreds of thousands of jobs are relying on this.”

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