Scottish hospitality businesses are being urged to urgently review their 2020 business interruption (BI) insurance policies, amid growing concern that thousands may wrongly assume their opportunity to claim for Covid-related losses has already passed.
In Scotland, time limits for bringing legal claims are governed by the Prescription and Limitation (Scotland) Act 1973, which generally provides a five-year prescriptive period for contractual claims.
As a result, many Scottish businesses believed their Covid BI claims prescribed in March 2025. However, advisers warn that this assumption is not always correct. A significant number of Scottish hospitality businesses were insured under policies governed by English law. In those cases, claims are instead subject to the Limitation Act 1980, which provides a six-year limitation period, meaning claims may remain live until March 2026.
Insurance broker, Sector Associates has identified that a growing number of policies issued to Scottish businesses were governed by English & Welsh Law and have approached insurers for clarification. Insurers have confirmed that in these circumstances, Covid business interruption claims remain capable of response until March 2026, even where the insured business is based in Scotland.
Calls for FCA intervention to extend Covid insurance claim deadline
Disputes firm Stewarts, supported by leading hospitality and leisure trade associations, has written formally to the Financial Conduct Authority (FCA) urging regulatory intervention as Covid business interruption claims approach expiry. The letter highlights prolonged delays, legal uncertainty and inconsistent claims handling, and asks the FCA to consider a solution preventing insurers from relying on the March 2026 deadline as a technical defence.
Hospitality sector urges FCA to extend BI claims window by two years – Stewarts
The Stewarts letter also addresses the ongoing dispute around the treatment of government furlough payments, which many insurers have sought to deduct from Covid business interruption settlements. This approach is being challenged, with policyholders arguing that furlough support was intended to protect employment rather than reduce insurance recoveries, and that further clarity is required to ensure consistent and fair outcomes across the sector.
The request has been backed by major hospitality and leisure associations, including the Scottish Licensed Trade Association, representing a significant proportion of UK pubs, restaurants, clubs, hotels and entertainment venues. These bodies have warned that without FCA intervention, many otherwise viable businesses — including thousands based in Scotland — risk losing access to compensation not because their claims lack merit, but because time has expired following years of delay and uncertainty.
Steven Swift, Director at Sector Associates, said:
“The request to the FCA from Stewarts Law to extend the March 2026 deadline becomes even more important. Thousands of businesses in Scotland could be affected and, like all operators in the hospitality sector, they need more time and clearer guidance. They need support from the FCA to come up with a solution.”