Stephen Finch, founder of UK wine retailer and bar chain Vagabond, has expressed confidence that insurance companies who initially refused to honour pandemic business interruption claims will now be forced to pay out, following a key High Court ruling in September. The decision comes as a potential lifeline to hundreds of thousands of UK businesses affected by Covid-19 lockdowns.

Finch, whose Vagabond Wine business spans eight hybrid wine bars and shops, was among those who took legal action after his insurer declined to pay out on a £1.36 million business interruption policy underwritten by Royal Sun Alliance. The policy was managed through Eaton Gate, which Finch said in April had “decided to deny all claims” related to pandemic losses.

FCA test case paves the way for compensation

In an effort to provide clarity for small and medium-sized businesses, the Financial Conduct Authority (FCA) launched a test case in June, bringing eight insurers to court to determine the validity of their pandemic-related claims refusals. The High Court’s ruling largely favoured the FCA’s arguments, marking a “significant victory” for policyholders, according to the regulator.

It is estimated that the ruling could impact up to 370,000 UK businesses, many of whom have faced financial hardship during the pandemic closures.

Although several insurers have appealed elements of the ruling to the Supreme Court, Finch remains confident that the High Court’s interpretation has set a clear precedent. “The ruling could not have been more favourable to us—it was a 10/10,” he told the drinks business.

Claims process now underway

While some insurers are continuing to appeal on narrow legal grounds—particularly clauses concerning how losses are calculated—Finch points out that none are appealing the core finding that business interruption coverage applies in pandemic-related cases.

“In the meantime, we are pursuing our claims,” he said. “The High Court and FCA were very clear that nothing waits until the result of the Supreme Court decision—the insurers must engage policyholders in terms of pay-outs right now. So we’re going through that.”

He added that insurers are obligated to begin compensation discussions with policyholders, despite pending appeals.

Appeals dropped as pressure mounts

Since the ruling, six of the insurers initially planning to appeal have withdrawn their challenges to parts of the judgment. According to City AM, this includes appeals related to Resilience, Eaton Gate Retail, and Eaton Gate Pubs & Restaurants policies. However, appeals concerning the Eaton Gate Commercial Combined policies and one additional policy are still ongoing.

The news provides cautious optimism for the hospitality sector, which has faced unprecedented closures and trading restrictions during the pandemic. For Finch and thousands of other business owners, the court decision marks a major step forward in holding insurers accountable for the promises made in their policies.

As the claims process moves ahead, many in the industry are watching closely to see whether insurers follow through on the ruling—or continue to delay vital financial support that could help businesses recover from the long-term effects of the pandemic.