More than 100 nightclubs, pubs and bars are planning coordinated legal action against insurer Hiscox over its non-payment of business interruption insurance claims.

Hiscox sold policies before Covid-19 hit the headlines, stating it would pay out when a business was forced to shut owing to a notifiable disease.

Business owners have filed claims to Hiscox and other commercial insurers only to be told their business interruption policies don’t cover the pandemic.

Michael Kill, the chief executive of the Night Time Industries Association (NTIA), which is coordinating the action, said: “Businesses are being denied legitimate insurance claims, many claims are being disputed by insurers based on contrived arguments to avoid sharing the financial burden during the Covid-19 crisis.”

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The group, which is being advised by the industry barrister Philip Kolvin QC, is calling on more businesses to join its move against the insurer.

The NTIA action comes as two separate Hiscox action groups, together involving about 200 more claimants, also consider legal action. Celebrity chef Raymond Blanc has also reportedly signed up lawyers after being denied a payout by Hiscox.

One action group backed by the insurance brokers advisory firm CEC, representing more than 30 businesses including gyms, restaurants and golf professionals, said at least some of Hiscox’s policies clearly state it would pay up where the interruption to the business was “due to restrictions imposed by a public authority during the period of insurance following an occurrence of a notifiable human disease”.

Roger Topping, of the action group, said some of the policies stated payouts would reflect how the business would have traded if the restrictions had not been imposed.

Business interruption policies typically pay up to £100,000 to cover the cost of keeping a company going if it is forced to close for reasons beyond its control. These include flood, fire, or even when a murder prevents the site from opening.

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Taxes levied on commercial premises will be abolished this year for all retailers, leisure outlets and hospitality sector firms.

Britain’s smallest 700,000 businesses eligible for cash grants of £10,000. Small retailers, leisure and hospitality firms can get bigger grants of £25,000.

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Northamptonshire businessman Simon Ager, who runs the Pinnacle climbing centre, started an action group which now has more than 100 members after being told his policy with Hiscox, including cover for losses up to £100,000, would not pay out on coronavirus pandemic claims.

On Wednesday, Hiscox said it had about 10,000 companies which had purchased cover for business interruption and had been directly impacted by the government-imposed closures.

It said its core small commercial package policies did not provide cover for business interruption as a result of the “general measures” taken by the government in response to the pandemic.

It said in a statement: “A number of UK policyholders have disputed the application of their policy in relation to business interruption. Hiscox recognises these are extremely difficult times for businesses and is determined to help provide greater certainty for customers. As a priority it will therefore work with the UK insurance industry, its regulators and its customers to seek means of expediting resolution through the range of independent mechanisms available.”

Hiscox added it was “actively settling claims” for event cancellation and abandonment, media and entertainment and other industries including travel. It expects to pay out $150m to settle claims if restrictions on travel and mass gatherings continue for six months.

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