Business Interruption Insurance in the UK: Key Trends for 2025
The UK’s business interruption (BI) insurance landscape remains dynamic in 2025, shaped by post-pandemic litigation, evolving risks, and heightened awareness of underinsurance. Here’s what businesses and professionals need to know:
1. Legacy of COVID-19 Litigation
- Courts continue to resolve disputes over pandemic-related BI claims, with recent rulings favouring policyholders. For example, the Gatwick Investment Ltd v Liberty Mutual case (2024) affirmed that lockdowns triggered BI coverage under “statutory authority” clauses. However, challenges persist, particularly around aggregation of losses and furlough payment deduction.
2. Underinsurance Crisis
A staggering 44% of UK SMEs still lack commercial insurance, while 80% of insured businesses are underinsured. The average BI policy shortfall is 53%, leaving many vulnerable to prolonged disruptions. Rising costs and Brexit-related uncertainties have exacerbated this gap, with 19% of SMEs reducing coverage in 2023.
3. Training & Policy Clarity
The Chartered Insurance Institute (CII) is addressing knowledge gaps through workshops focused on calculating gross profit, indemnity periods, and post-COVID policy adjustments. Brokers are urged to ensure clients understand coverage limitations, especially for non-damage triggers like cyberattacks or supply chain failures.
4. Emerging Risks
BI now intersects with systemic threats:
- Cyber incidents (#2) global risk and natural catastrophes (#3) drive claims.
- Supply chain disruptions (e.g., Red Sea crises, Baltimore bridge collapse) highlight the need for robust BI clauses.
5. Action for Businesses
- Review policies for clarity on non-damage triggers and maximum indemnity periods.
- Consider composite policies for multi-premises coverage, as upheld in Corbin & King v AXA (2022).
- Leverage legal precedents to challenge claim denials, with courts increasingly siding with policyholders.
With the FCA reporting £1.5B paid to SMEs for COVID-19 BI claims, 2025 is a pivotal year for risk resilience. Let’s ensure businesses are protected against the next crisis.
Contact Lighthouse Consultants if you need help with your claim.
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