Multiple insurers have admitted they are liable to pay company owners under business interruption insurance policies after the regulator challenged them to prove in court their policies did not apply to the coronavirus pandemic.

The Financial Conduct Authority (FCA) is seeking court clarification on whether insurers’ policies allow them to refuse business claims related to the coronavirus pandemic. The hearing is scheduled for late July.

The majority of small businesses were not covered for the pandemic, as their policies mainly related to property damage, the regulator believes. However, after the regulator asked 56 insurers for information on 1 May, an undisclosed number quickly gave in and said they would pay out, after previously insisting they were not liable.

In a statement the FCA said: “A number of the relevant insurers decided to accept claims from policyholders with certain policies which included particular wordings which had previously been in dispute.”

The test case in the high court will look at 17 representative policy wordings, while eight insurers will be defendants. They are Arch Insurance, Argenta Syndicate Management, Ecclesiastical Insurance Office, Hiscox, MS Amlin Underwriting, QBE, Royal & Sun Alliance, and Zurich. Policies from Allianz, American International Group, Aspen, Aviva, Axa, Chubb, Liberty Mutual and Protector also include the wording to be tested in court.

The FCA will detail in early July which other companies will also be covered by the eventual ruling.