For Business
If an insurer has refused your claim, cut the settlement, avoided the policy or simply stopped responding, our commercial litigation solicitors can challenge the decision. We act for businesses and individual policyholders across the UK.
A refused insurance claim usually arrives at the worst possible moment. The premises are unusable, the stock is gone, the business has stopped trading, and the policy you bought to cover exactly that is now the subject of an argument.
In our experience, insurers decline claims on one of four grounds: that the loss is not covered, that a condition or warranty was breached, that something was not disclosed when the policy was taken out, or that the claim is overstated. Each is a legal question. A refusal letter is a position, not a determination.
Our team of commercial litigation solicitors acts for policyholders across the UK in disputes with insurers, from a single refused property claim to multi-site business interruption and liability disputes. Call 01689 887820 or complete our enquiry form to arrange an initial consultation with our experienced team.
Those grounds reach us in three shapes, plus one further situation that is not a ground of refusal at all:
The claim has been declined outright, on the basis that the loss falls outside cover or within an exclusion. Policy wording is frequently less clear than the decline letter suggests, and it is for the insurer to establish that an exclusion applies.
The policy has been avoided for non-disclosure or misrepresentation, with the insurer treating it as though it never existed. The Insurance Act 2015 restricted what an insurer may do on this ground, as set out below.
The settlement offered is too low, whether because the amount you insured for is said to be inadequate, because the period the policy pays out for is disputed, or because a loss adjuster has challenged the figures.
Nothing is happening. The claim has neither been paid nor declined, and months are passing. There is a specific legal remedy for this, set out below.
If an insurer is avoiding your policy for something you did or did not say when you took it out, the position depends on whether the cover is business or consumer.
For business insurance, the Insurance Act 2015 requires a fair presentation of the risk. That means three things:
You must disclose every material circumstance you know or ought to know, or give the insurer enough information to put a prudent insurer on notice that it needs to ask more.
The presentation must be reasonably clear and accessible.
Statements of fact must be substantially correct, with statements of expectation or belief made in good faith.
The insurer cannot simply walk away. It must show a qualifying breach, meaning that but for the breach it would not have entered into the contract at all, or would have done so only on different terms. The remedy is then proportionate to what the insurer would actually have done:
if the breach was deliberate or reckless, the insurer may avoid, refuse all claims and keep the premium;
if it was neither, and the insurer would not have written the risk at all, it may avoid and refuse claims but must return the premium;
if it would have written the risk on different terms, the policy is treated as if it had included those terms;
if it would simply have charged more, the insurer may only reduce the claim proportionately, by the ratio of the premium charged to the premium it would have charged.
The last of those remedies matters most in practice: a policyholder told the policy is void may still be entitled to a proportion of the claim.
For consumer insurance the duty is narrower, and it comes from a different statute. Under the Consumer Insurance (Disclosure and Representations) Act 2012 a consumer must take reasonable care not to make a misrepresentation, and that duty replaces any earlier duty of disclosure. The obligation is to answer the insurer’s questions carefully, not to work out unaided what the insurer might consider material. Careless misrepresentation attracts proportionate remedies.
Section 13A of the Insurance Act 2015, added by the Enterprise Act 2016, applies to contracts of insurance entered into on or after 4 May 2017. Every such contract contains an implied term that if the insured makes a claim, the insurer must pay any sums due within a reasonable time. A reasonable time includes a reasonable time to investigate and assess the claim.
What is reasonable depends on the type of insurance, the size and complexity of the claim, the insurer’s compliance with regulatory rules and guidance, and factors outside its control. If the insurer shows it had reasonable grounds for disputing the claim, it does not breach the term merely by not paying while the dispute continues. But its conduct in handling the claim is expressly a relevant factor in deciding whether the term was breached and when.
The remedy is damages, in addition to and distinct from the right to enforce payment and any right to interest. So a business that had to borrow, lost contracts or laid off staff while a claim went unanswered may have a claim for those losses as well as for the policy money.
There is a short deadline. Under section 5A of the Limitation Act 1980, a claim for damages for late payment must be brought within one year of the date the insurer pays everything due under the claim. Raise it with us early rather than after the policy money has been settled.
We start with the policy, the proposal or presentation, the underwriting file where we can get it, and the decline letter. Most disputes are won or lost on wording and on what the insurer can actually establish. The same approach applies to contractual and consumer disputes generally.
For consumers and smaller businesses, the Financial Ombudsman Service costs the complainant nothing to use and is usually quicker than litigation. Its jurisdiction is limited by size, and the limits matter:
A micro-enterprise, meaning fewer than 10 employees and turnover or a balance sheet total not exceeding €2 million (the threshold is set in euros in the FCA rules), is eligible.
A small business, meaning turnover under £6.5 million and either fewer than 50 employees or a balance sheet total under £5 million, is eligible.
Charities with annual income under £6.5 million and trustees of trusts with net assets under £5 million are also eligible.
For complaints referred on or after 1 April 2026, the maximum binding award is £455,000 where the act or omission complained of took place on or after 1 April 2019, and £205,000 where it took place before that date. The limits are uprated each April.
You must generally refer a complaint within six months of the insurer’s final response, and within six years of the event complained of, or, if later, three years from when you knew or ought reasonably to have known you had cause for complaint.
An Ombudsman determination binds both the insurer and you if you accept it, and is final. If you reject it, you remain free to litigate. That is worth understanding before you accept an award, and it is one of the things we advise on.
Mediation is often effective where the argument is about the amount of the claim rather than whether it is covered at all, and the courts now expect parties to engage with it. In Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416 the Court of Appeal confirmed that a court may lawfully order parties into a non-court dispute resolution process. Since 1 October 2024 the Civil Procedure Rules have expressly included promoting or using alternative dispute resolution within the overriding objective, given the court power to order parties to engage in ADR, and made an unreasonable failure to engage a factor in costs.
Where a business falls outside the Ombudsman’s jurisdiction, or where the sums or the point of principle justify it, we issue proceedings. Fixed recoverable costs apply to most fast track and intermediate track claims up to £100,000. Larger commercial disputes fall outside that regime and are dealt with in the multi-track, or in the Commercial Court where value and complexity warrant it.
Cover disputes turning on what triggers the policy, how long it pays out for (the indemnity period), how the business’s trading trends are accounted for, and how lost gross profit is calculated. On the policy wordings it considered, the Supreme Court held in the FCA’s business interruption test case that cover can respond to partial as well as full closure, that closure instructions which were not legally binding can trigger cover, and that valid claims are not to be reduced on the basis that the policyholder would have suffered pandemic losses anyway. Whether your policy responds depends on its own wording.
Commercial property and material damage claims
Business interruption and consequential loss
Professional indemnity and directors’ and officers’ cover, including coverage disputes with the insurer alongside the underlying professional negligence claim
Public and employers’ liability coverage disputes
Contractors’ all risks and construction policies, which often run alongside construction disputes
Motor and fleet claims
Marine, cargo and goods in transit
Cyber and crime policies
Buildings and household claims for individual policyholders, including subsidence, escape of water, fire and flood
Credit and trade credit insurance, which often runs alongside debt recovery
Insurance disputes are usually funded on an hourly rate basis, and we will give you a costed plan stage by stage rather than an open-ended engagement. Our funding arrangements for your business page sets out the options. Before we do, three things are worth checking:
Your own legal expenses cover. Many commercial and household policies include legal expenses insurance, which may fund a dispute with a different insurer. Send us your full policy schedule and we will check.
Whether the Ombudsman route is open to you. The Ombudsman charges the complainant nothing, and if you are eligible it should generally be tried first. If you ask us to help you prepare a complaint, our own fees for that work are chargeable and we will quote for them separately.
Whether the case suits a different arrangement. In some substantial disputes a conditional fee agreement or a damages-based agreement may be possible. Under either, our fee comes out of what you recover rather than being paid as the case goes along, and you would still be responsible for disbursements and for any costs order made against you. A damages-based agreement is capped by statute at 50% of what you recover, including VAT, in a commercial claim of this kind. We will tell you whether your case is suitable and set out the figures before you sign anything.
No. A decline letter is the insurer’s position, not a determination. Policy wording is often less clear than the letter implies, and it is for the insurer to establish that an exclusion applies.
Only if it can establish a qualifying breach, meaning that the non-disclosure actually affected its decision, and even then the remedy is proportionate to what it would have done had it known. Being told a policy is void does not mean you will recover nothing.
There is no fixed period. The insurer must pay sums due within a reasonable time, which includes a reasonable time to investigate. Where a claim has been sitting for months without a decision, the insurer’s conduct in handling it becomes relevant, and damages for late payment may be available.
If you are eligible, the Ombudsman is free and usually quicker, and it should generally be tried first. If your business is too large to be eligible, or the sums exceed the award limit, litigation or arbitration is the route. We will advise on which fits your situation before you commit to either.
If you reject the Ombudsman’s determination, yes. If you accept it, it binds both sides and is final. This is why the decision to accept an award should be taken with advice rather than on the deadline.
Potentially. Damages for breach of the implied term to pay within a reasonable time are separate from, and additional to, the sums due under the policy and any interest. Losses of that kind need evidencing from the outset, so raise them early.
Yes. Although this page sits in our business services, we act for individual policyholders in household, buildings and motor disputes as well as for companies.
Send us the policy, the decline letter and a short summary of the claim, and we will tell you whether the insurer’s position stands up.
Contact our team of insurance dispute solicitors on 01689 887808 or complete our enquiry form to arrange an initial consultation
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