Travel agents could be among thousands of small businesses set to receive insurance payouts covering losses in the first national lockdown, following a Supreme Court ruling today.

The court found in favour of small firms receiving payments from business interruption insurance policies.

It could provide a lifeline for many, allowing them to trade beyond the Covid crisis.

The ruling could cost the insurance sector hundreds of millions of pounds, the BBC reported.

In the lockdown of last spring, many small businesses made claims through business interruption insurance policies for loss of earnings when they had to close.

But many insurers refused to pay, arguing only the most-specialist policies had cover for such unprecedented restrictions.

It was agreed that a selection of policy wordings should be tested in court, setting the parameters for what would be considered a valid claim.

The ruling provides guidance for a wider pool of 700 policies, potentially affecting 370,000 small businesses, including some agents.

Issuing the ruling, Lord Hamblen said the court accepted the arguments from representatives of policyholders and dismissed appeals from insurers against an earlier judgment finding in policyholders’ favour.

The detailed ruling covered issues such as disease clauses, whether business were denied access to the properties, and the timing of lost earnings.

Abta welcomed the ruling. A spokesperson said: “The Supreme Court judgement today brings welcome clarity for those travel businesses with business interruption insurance.

“What it means in practice is that insurers can’t point blank refuse to pay out citing the pandemic being unprecedented. Instead, it will depend on what is in the terms of the insurance.

“We encourage members who have business interruption insurance, and have had their claim denied, to speak to their insurer or broker about next steps. If the terms account for the circumstances of the pandemic, then the ruling means they should now be entitled to a pay out.”