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The hospitality industry was one of the sectors most severely affected by Covid-19.

Trading restrictions have drastically affected companies’ revenue due to fixed costs, and the accumulation of debt added up to push the bottom line into negative.

The strong hospitality industry is crucial for the UK economy. Although there was a temporary relief of the Eat Out to Help Out program in the summer of 2020, an ongoing series of lockdowns and restrictions that lasted nearly two years eventually resulted in massive disruption. The result was a cumulative level of financial loss, which caused some companies to shut down for their business.

There is a chance that around 10,000 licensed premises, including bars, clubs, and restaurants, will be closed for good in 2020, a devastating blow on a business designed to connect people.

For many of the companies that made it through the storm, business interruption (BI) insurance was considered a vital lifeline. However, many hospitality businesses that tried to take advantage of their BI policies to cover their losses have met with shrewd resistance from insurance companies, many of whom have refused to give out the funds under their policies.

To deal with this issue, the issue is being addressed in the courts by numerous businesses affected. The most notable of these is the latest BI lawsuit brought by Corbin & King, which operates cafes, restaurants, and brasseries such as The Delaunay, Bellanger, Colbert, and The Wolseley.

At the High Court, the restaurateurs have won their case against the UK branch of French insurer AXA. In her decision, Justice Cockerill ruled that Justice Cockerill found that AXA is required to pay under the BI policy for the losses Corbin & King had incurred during the lockdowns that caused pandemics from 2020 (March through July, and November through December). After a loss adjustment exercise, it is anticipated that this decision could cost Axa as much as PS4.4m.

The judge said that the case impacted “not only these litigants but also a broad number of other businesses” and stated that “many disputes could be avoided” through her decision.

The Supreme Court judgment originally laid the foundation for this lawsuit in January 2021. The case was related to the BI test case filed by the Financial Conduct Authority on behalf of many thousand policyholders. In the process, the FCA recognized that the issues surrounding BI policies are complicated and could cause ongoing confusion for insurance companies and policyholders. Therefore, they brought an investigation case against some major insurance firms.

In its landmark decision, the Supreme Court substantially allowed the FCA’s appeal. While this ruling was great news for many policyholders and insurers, it resolved a lot of the uncertainty for the latter. Some limitations also accompanied it. The trial case was not able to be able to cover all scenarios since it was not intended to settle all disputes or determine the result of every possible individual claim.

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