Mishcon de Reya has been hired by a group of more than 200 small companies in a dispute with Hiscox over business interruption policies they purchased that have failed to pay out amid the coronavirus pandemic.

Mark Killick, one of the founding members of the customer group, said it was in talks with two litigation funders who were prepared to fully underwrite its planned legal battle, The Times reports.

The insurer’s customers have been forced to shut down their businesses due to the coronavirus lockdown and claim that their insurance policies entitle them to payouts. Hiscox has rejected the claims on the ground that the policies were not designed to cover situations such as pandemics.

Other business customers, aside from those within Mr Killick’s group, are also preparing legal action over the issue. Such businesses include pubs and clubs, led by the Night Time Industries Association.

The businesses are increasingly worried that they will not survive the COVID-19 pandemic if they cannot receive funds from their policies.

Mr Killick, of the PR firm Media Zoo, said: “We have appointed top legal counsel, we will be fully funded and we are going to force Hiscox to do the right thing and honour its obligations.”

Richard Leedham, the Mishcon partner leading the action, added: “Our instructions are to pursue all claims as vigorously as possible to prevent hundreds of good British companies from being driven out of business.”

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