Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Law360, London (April 14, 2020, 2:52 PM BST) -- Companies are considering a class action lawsuit against Hiscox Insurance over failure to pay business interruption claims relating to the government-imposed coronavirus lockdown, despite policies they argue are "unambiguous" in offering protection.
PR company Media Zoo said on Sunday that itself and "dozens" of other businesses who have also had claims refused are coordinating a response, which may be in the form of a class action or a complaint to the Financial Ombudsman Service.
The company's policy wording says business interruption claims can be made if a public authority makes the business premises unusable due to "an occurrence of any human infectious or human contagion disease."
"We took out the Hiscox business interruption insurance believing the company would honor its obligations," said Rachel Pendered, Media Zoo's managing director. "To find out that it has no intention of doing so simply because it is going to be expensive is shocking."
Hiscox said the policy would only be triggered by "certain specific events at, or local to, the premises." The insurer said its policies were not designed to cover the extraordinary circumstances caused by the pandemic.
"Like terrorism and flood, which have government-backed insurance schemes, pandemics like coronavirus are simply too large and too systemic for private insurers to cover," a spokeswoman for Hiscox said.
Media Zoo has written to the U.K. Business Secretary Alok Sharma to ask the government to investigate the company.
"If it is the case that in the current crisis Hiscox is refusing legitimate business interruption claims simply to preserve its own capital base, it is a disgrace and one that threatens the future of dozens of decent companies across the UK," Mark Killick, Media Zoo creative director, wrote in the letter.
A spokesman for the company said he was not aware whether legal counsel has been appointed.
Separately, claims management company CEC has set up a "Hiscox Action Group" to coordinate a challenge against claim rejections. The company did not immediately respond to a request for comment.
On its website, CEC says Hiscox has been rejecting claims on the basis that "an occurrence" indicates a single, isolated outbreak at the business premises.
"It is our view that Hiscox have repudiated the claim on the basis of what they would like the policy to say not what it actually says," CEC said. "We intend to seek a legal opinion on the validity of the insurers refusal to indemnify and then consider coordinated legal action based on that advice."
--Editing by Rebecca Flanagan.
For a reprint of this article, please contact firstname.lastname@example.org.