The FCA Test Case appeal in the UK Supreme Court dealt with the meaning of “inability to use” business premises in the relevant non-damage extensions to the business interruption section of the policy considered by the court.

The relevant non- damage Public Authority clauses did not cover all business interruption due to “restrictions imposed” by public authority following an occurrence of a notifiable disease.  They applied where interruption is caused by the policyholder’s “inability to use” the business premises due to such restrictions.

The appeal court agreed with the lower court that an inability to use has to be established. It is not to be equated with hindrance or disruption to normal use. The language of the clause however did not require there to be a complete inability to use the premises for all purposes. The “inability to use” the business premises may include the loss as a result of a policyholder’s inability to use either the whole or a discrete part of its premises for either the whole or discrete part of its business activities.

Where insurers only intend to insure the phrase to constitute a complete bar to use, the policy wording is easily refined or an appropriate definition can be added to the policy.