Pay outs from insurance companies to thousands of small businesses, including estate agencies, that suffered Covid related losses should be made immediately if they are to survive beyond the current coronavirus crisis, according to tax and advisory firm Blick Rothenberg.

A Supreme Court ruling last week forces insurers to pay out on disputed coronavirus business interruption claims worth at least £1.2bn.

Tens of thousands of small businesses will now receive insurance payouts covering losses from the first national lockdown, following the court ruling.

For many businesses, including some estate agencies, it could provide a lifeline, enabling them to trade beyond the existing pandemic.

Mark Hart, a partner at Blick Rothenberg, said: “The court’s decision was welcome news for small and medium sized businesses mainly in the retail and leisure industries which have had significant disruption as a result of the pandemic.

“The ruling which will be used as guidance for any disputed business interruption insurance cases, could impact 700 types of policies, and 60 insurers as well as 370,000 small businesses and policyholders.”

Although the judgement is largely in favour of insurance policyholders, it is also complex, according to Hart.

He continued: “As always with insurance disputes, it is crucial to look at the precise terms of any given policy to determine whether and when it would be triggered, and what losses can be claimed. Therefore, businesses should review the policy wording carefully and if necessary, seek legal advice to find out what the findings mean for their policy. For a number of businesses, the paperwork for the claims has been in place since lockdown one.”

“Some policy holders are also entitled to damages for events as a consequence of not having received the insurance pay out last spring, so for example a restaurant or retail store may have invested in a new site but could not do so because it was struggling as a result of not having received funds its insurers, or a business’s shareholders became diluted as a result of having to take on investment from third parties as a result of the slow pay out.

“However, many small businesses will find it difficult to prove these claims unless these decisions were minuted at the time, therefore there is a danger that businesses will not receive all the compensation they are due because they do not have the resources to bring those claims and will simply settle for the loss of profits as that is easier to prove.”

Hart added: “If you believe you have business interruption cover, it is vital that you carefully keep documentary evidence of the way in which the business has been interrupted by the pandemic and the amount of the losses incurred so that you can make a claim now.

“New policies will no longer include these clauses or level of cover so the ability to claim for loss of profits will be narrowed and the cost of any cover is sure to increase as insurance companies look to recover the losses made on these policies.”