Some of Britain’s biggest insurance companies are facing legal action from small business owners who say their legitimate business interruption claims have been unfairly turned down. Following the forced closure of thousands of businesses across the UK, insurers across the board were quick to change their policy terms in an attempt to rule out claims arising from the Covid-19 pandemic. Although several large insurers including Allianz, Aviva and Axa do not provide cover, some insurers, most notably Hiscox, sold policies before Covid-19 hit the headlines, stating they will pay out when a business was forced to shut owing to a notifiable disease. Business interruption policies typically pay up to £100,000 to cover the cost of keeping a company going if it is forced to close for reasons beyond its control. These include flood, fire, or even when a murder prevents the site from opening. Business owners have filed claims to Hiscox and other commercial insurers in recent days, only to be told their policies don’t cover the pandemic. Last week, the Financial Conduct Authority told insurers to halt dividend payments to allow them to pay claims. It had already told insurers it expects them to treat customers fairly. A group of brokers and loss adjusters havejoined forces and will ask a barrister to examine the policies, with a view to taking legal action. The Hiscox Action Group said the firm’s policies clearly state they will pay up where the interruption to the business was “due to restrictions imposed by a public authority following an occurrence of a notifiable human disease”. Other insurers, including Eaton Gate, have similar terms and expected to face similar legal action in the coming months, the group said. Alan Dexter, who runs four restaurants in Glasgow, including Barsa Tapas, said two of his premises have business interruption cover provided by Hiscox but his claims were last week denied. He has been forced to put his 140 staff on furlough because of the crisis. Dexter said: “Our broker pointed out that the cover states we can claim in the event of a notifiable disease, and, to my untrained eye, the policy appears to cover the exact circumstance I and many other business owners find themselves in. But after taking several days, Hiscox last week came back and said it would not be paying our claim. The company markets itself in its publicity material as the insurer that always pays out, but that has not been my experience.” Roger Topping, who runs TopMark Adjusters, a Glasgow-based firm of loss adjusters and one of those behind the legal challenge, has called on the insurers to pay or for the government to step in. Topping said: “We have heard ministers tell insurers to pay these claims but, to my knowledge, not a single insurer has broken ranks and paid a claim. This is not just a Hiscox issue, several other companies including Eaton Gate, an insurer backed by Royal Sun Alliance, are in a similar position. It seems that the massive losses involved have caused the insurance industry to start searching for reasons not to pay.” He called for the government and insurers to find a solution before “a multitude of legal actions against insurers begin, and massive sums of money are wasted on legal fees. We need something along the lines adopted previously for claims following riots, flooding, or what we saw in Northern Ireland at the height of the Troubles.” Hiscox said: “We understand that these are incredibly difficult times for businesses affected by Covid-19. At Hiscox we strive to pay claims that are covered by the policies fairly and quickly. “However, general business interruption policies across the industry, including Hiscox’s, were not designed to cover these extraordinary circumstances. 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,” it added. Last month, the Association of British Insurers told parliament’s business committee that few companies would be protected for their losses by their insurance policies.