Business Interruption Insurance Disputes UK (2025)

Overview

Business interruption insurance is a policy add-on, usually sitting alongside commercial property cover, that responds when an insured event prevents a business from trading normally. Rather than paying for physical damage, it compensates for the financial knock-on effects: lost revenue, ongoing overheads, and the cost of keeping things running while the business recovers.

Most UK policies are triggered by an insured peril causing damage at the insured premises, though some extensions respond to wider events such as denial of access, supply chain failure, or notifiable disease at or near the site. The sum insured is typically tied to gross profit or revenue over an agreed indemnity period, commonly twelve, eighteen or twenty-four months.

Because policies are negotiated documents rather than standard forms, two policies marketed as 'BI insurance' can cover very different scenarios. That is why disputes so often turn on the precise drafting of the trigger clause, the definition of the insured peril, and how the indemnity is calculated. Reading the schedule alongside the policy wording, not just the summary, matters far more than many business owners realise.

Key steps

1. Read the policy wording in full before you argue. The schedule, main wording and endorsements all need to be considered together. Look for the specific insured perils, any extensions such as denial of access or disease clauses, the indemnity period, and any sub-limits. Most disputes come down to a single definition, so understanding the exact trigger your claim relies on is the starting point for everything else. 2. Document the loss properly from day one. Keep a dated record of what happened, when trading was affected, and what steps you took to limit the damage. Save management accounts, VAT returns, payroll records and bank statements showing the pre-incident baseline. Insurers and their loss adjusters will expect evidence of turnover, gross profit and fixed costs, and gaps in the paperwork tend to slow payment down considerably. 3. Engage constructively with the loss adjuster. A loss adjuster is appointed by the insurer but is expected to act fairly. Respond to information requests promptly, put your position in writing, and ask for their queries in writing too. If you disagree with how they are calculating the loss, set out why with figures rather than simply complaining. A well-evidenced position is much harder to dismiss than a general sense of unfairness. 4. Challenge a declined or reduced claim through the insurer's complaints process. Every UK insurer must operate a formal complaints procedure. Put your complaint in writing, quote the policy wording you rely on, and explain why the decision is wrong. The insurer generally has up to eight weeks to issue a final response. Keep all correspondence, because this paper trail becomes important if you escalate further. 5. Escalate to the Financial Ombudsman Service or consider litigation. Smaller businesses meeting the Ombudsman's eligibility criteria can refer a dispute to the FOS once they have a final response or the time limit has passed. Larger businesses, or those with complex commercial claims, may need to consider court proceedings or arbitration. Time limits apply under the policy and under the Limitation Act, so acting promptly matters.

Common questions