High profile farming family at forefront of legal challenge to insurer over Covid business losses

NFU Mutal, which has a major presence in Shropshire with offices across the county, has previously defended its position not to pay out on some of its policies following a case that went to the Supreme Court.

A sticking point is over whether the Covid pandemic should be defined as an 'incident'. The insurer believes that because this interpretation was not challenged at an earlier case that the pandemic was not an incident.

Tim Ashton’s family, from Soulton Hall in Wem are within the set of initial claimants in a case that is set to be decided by the High Court.

Soulton Hall is a wedding and events venue with accommodation and like all other hospitality firms saw their incomes crash when the government closed them during lockdown.

Mr Ashton said: “The Covid-19 pandemic broke out and we found we could not trade because it was illegal to run the hospitality side of our business.

“Prior to Covid, the family had prudently bought expensive insurance policies with NFU Mutual to cover this risk, which senior leadership at the insurer are continuing to seek to escape despite repeated judgments in the court making that increasingly untenable.”

A spokesperson for the legal firm Penningtons Manches Cooper LLP says it has recently issued and served group action proceedings on behalf of an initial group of 37 affected businesses against NFU Mutual relating to unpaid Covid-19 business interruption clams.

"For many businesses, the coronavirus pandemic and lockdown measures resulted in a significant loss of income and a large number of insurers have to date still declined to pay claims under their business interruption insurance policies," the spokesperson said.

"The group action claim relates to certain NFU Mutual policies, principally affecting hospitality businesses such as hotels, bed & breakfasts, campsites, wedding venues, pubs, bars, restaurants, and various other hospitality businesses.

"The relevant policies contain a specific ‘endorsement’ that was included in many NFU Mutual policies sold to such businesses prior to the pandemic.

"We understand that this endorsement may have been included in potentially thousands of NFU Mutual policies issued at the time and so we expect this initial small group of 37 businesses represents only the very tip of the iceberg.

"At present, NFU Mutual are continuing to deny liability to pay any and all of these customers’ claims, adversely impacting many struggling businesses."

The law firm is leading a no-win-no-fee action against the insurer and say it is not too late for businesses to join the group.

"In fact, the only way to ensure that your business stands to benefit in the event that the Court concludes the policies should have paid out is to actually be named in the group action.

"As such, we are still keen to hear from anyone who thinks they might possibly be affected.

"If there is a potential claim under the policy, such businesses can then be invited to join the relevant ‘no-win no-fee’ group action more formally, and try to recover some of their losses before it’s too late."

A spokesperson for NFU Mutual said they "can’t comment on active legal proceedings."

But the company did issue a statement on this matter in January 2022 which indicates its position.

At the time an NFU Mutual spokesperson said: " “We have received correspondence from Pennington Manches Cooper, who have served legal proceedings on behalf of a small group of our customers.

“In the FCA’s Test Case into Business Interruption, the High Court found that policy wordings similar to NFU Mutual’s do not cover the pandemic and the restrictions that followed.

"Therefore, the judgment did not trigger cover for customers with our “Hospitality Endorsement – Action of Competent Authority” extension.

“The High Court’s finding that the pandemic could not be considered an ‘incident’ was not appealed to the Supreme Court and so we believe it remains the correct legal position.”