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What you need to know
A limitation period is the time limit for bringing a legal claim. Once that period expires, you usually lose the right to start court proceedings, even if your claim would otherwise have succeeded.
In 2021, the Supreme Court confirmed that many business interruption (BI) insurance policies could cover pandemic-related losses. That landmark decision, known as the FCA Test Case, found that certain “disease” and “prevention of access” clauses can apply to closures caused by Covid-19. It also set out principles for how losses should be linked to the pandemic and policies should be interpreted.
Since then, the courts have continued refining the scope of BI cover, addressing how losses are calculated, how particular policy wordings work in practice, and how Government support such as furlough payments should be treated. The Supreme Court is due to revisit that final issue next year, so the story is not finished yet.
What matters now is that the legal landscape has shifted. Businesses whose Covid-19 claims were previously rejected may have stronger grounds today than they did several years ago. However, an insurance policy is a contract, and (provided the policy does not set out a shorter period) the limitation period to bring a claim for failing to pay out is six years.
Why it matters
It is hard to believe, but the six-year anniversary of the pandemic is approaching. From March 2026, many businesses will start to lose their legal right to pursue Covid-19 BI claims if steps are not taken to protect them.
This is more than just a legal technicality. A time-barred claim could represent a missed opportunity to recover substantial sums and strengthen the balance sheet. For finance and audit teams, it may also raise accounting questions, such as whether potential recoveries or write-offs should be recognised in upcoming reporting cycles.
It is worth noting that the exact start date of the six-year limitation period can depend on specific policy wording and when the loss occurred or was capable of calculation. Another point to check is how policy limits apply across corporate groups. Courts have recently examined whether group policies apply one shared limit or separate limits for each entity, which can make a big difference to the potential recovery.
What you should do next
Many businesses decided not to pursue claims after initial insurer rejections in 2020 or 2021, which was understandable at the time given the legal uncertainty. But those early decisions may now be open to challenge.
Here are some practical steps to take now:
- Locate and review your business interruption insurance policies, especially those with “disease”, “prevention of access”, or hybrid wording that combines the two.
- Revisit past correspondence with insurers and brokers, even if your claim was denied. Circumstances and interpretations have evolved.
- Seek legal advice early to confirm your limitation deadline and, if appropriate, take action to preserve your right to claim.
Looking ahead
The window of opportunity to pursue potential claims is finite and fast approaching. The key point is not to assume that a previously rejected or unsuccessful claim remains the end of the story. The legal landscape has evolved since many insurers first declined Covid-19-related business interruption claims, and some that once appeared unmeritorious may now have stronger prospects.
Early review is a simple step that can prevent future regret once limitation periods expire.
If you are considering pursuing a BI claim, please do get in touch with Jonathan Kitchin or Abigail Brown in our Commercial & Regulatory Disputes team.