Small businesses could receive insurance payouts covering losses they endured during the first national lockdown.

This follows a ruling by the Supreme Court which found largely in favour of small firms receiving payments from businesses with insurance policies that include cover for 'business interruption'.

Judges unanimously dismissed insurance companies' appeals against a previous High Court Ruling which found they should pay most claims.

Around 700 kinds of insurance policies from 60 different insurers could be impacted by the ruling handed down today.

For some small businesses the decision could be a lifeline, allowing them to survive beyond the COVID-19 crisis.

When Britain locked down in spring last year, many small businesses made claims through business interruption insurance policies - they wanted to cover the loss of earnings brought about by their enforced closure.

But many insurers wouldn't pay up. They said that only the most specialist policies provided cover for such unexpected and extraordinary restrictions on trading.

This led to a selection of policy wordings being tested in court, and it was decided which of them would be subject to a valid claim.

Huw Evans, Director General of the Association of British Insurers, said: "Insurers have supported this fast-track legal process every step of the way and we welcome the clarity that the judgment will bring to a number of complex issues. Today's judgment represents the final step in the appeal process.

"The insurance industry expects to pay out over £1.8 billion in COVID-19 related claims across a range of products, including business interruption policies. Customers who have made claims that are affected by the test case will be contacted by their insurer to discuss what the judgment means for their claim. All valid claims will be settled as soon as possible and in many cases the process of settling claims has begun. Some payments have already been made where valid business interruption claims have not been impacted by the test case ruling.

"We recognise this has been a particularly difficult time for many small businesses and naturally regret the COVID-19 restrictions have led to disputes with some customers. We will continue to work together as an industry to ensure customers have the clarity they need when it comes to what they can expect from their business insurance policies."