However, the case reached the Supreme Court in November after the aforementioned insurers and the FCA sought to appeal aspects of the judgement.
In a classic case of sell the rumour, buy the news, Hiscox shares rallied higher despite the ruling, which forces the company to compensate business insured against business interruptions.
Six of the world's largest commercial insurers - Hiscox, RSA, QBE, Argenta, Arch and MS Amlin - said many business interruption policies did not cover widespread disruption after Britain's first national lockdown last March.
"Hiscox welcomes the clarity that the Judgment provides and the processing of claims has begun", the company said.
Sheldon Mills, the executive director of consumers and competition at the financial services regulator, said the regulator was working with insurers to get payments made as quickly as possible and have interim payouts wherever possible.
However, businesses can take out specific extensions to BI cover for non-physical damage, such as closure of premises or denial of access ('prevention of access clauses'), or cover which is explicitly related to infectious or contagious diseases ('disease clauses').
Speaking to Insurance Business, Richard Leedham, partner at Mishcon de Reya, the firm representing the Hiscox Action Group which was fighting the insurers, said that the judgement recognised that "insurers did not have the right to argue that coverage was only applicable where narrow local restrictions were in place or to deny claims because the cover had not been meant to be provided, or because the interruption and losses would have occurred in any event".
The Supreme Court ruling is also expected to have broader implications for the insurance industry. Insurers should also communicate directly and quickly with policyholders who have made claims affected by the judgment to explain next steps.
In April, many auto dealers found they were unable to claim on their policies when they were forced to shut by Covid restrictions as insurers claimed the coronavirus pandemic wasn't covered.
'We recognise this has been a particularly hard time for many small businesses and naturally regret the Covid-19 restrictions have led to disputes with some customers'.
"As a result, many businesses have been forced to take on additional loans and, without the necessary Government financial support, many firms that would otherwise be viable are in extreme danger of going out of business".
With the Supreme Court upholding the appeal, policyholders can now claim for losses under their "business interruption" policies.
The Association of British Insurers said that the compensation process had started in some cases.
Other arguments hinged on a precedent set in a 2010 High Court case which found that an insurer did not have to pay out business interruption insurance to a New Orleans hotel after hurricanes Katrina and Rita.