Business interruption
Standard business interruption insurance only covers physical damage at a property which results in the business being unable to continue to trade. Therefore, it does not typically cover losses caused by pandemics or forced closures by authorities.
However, you may have extensions covering all losses attributable to notifiable diseases and also forced closures. Since COVID-19 has been made a notifiable disease in the UK, claims are possible for losses suffered on or after:
- 22 February in Scotland
- 29 February in Northern Ireland
- 5 March in England
- 6 March in Wales
Yet, because COVID-19 is such a new risk, we are yet to see a policy which explicitly lists it, even if it covers notifiable diseases. So far, insurers have had varied responses regarding paying out. AXA have confirmed that they will only cover diseases that are already specified and named in their contracts and RSA have stated that they will deal with coronavirus cases on a claim-by-claim basis.
Event cancellation insurance
Most contingency insurance policies contain specific exclusions for pandemics, so insurers will not pay out. If the policy does not contain such an exclusion, then whether a claim is possible will depend on the reason for cancelling the event. Usually, there is a requirement for a decree from a government or the World Health Organisation that mass gatherings are banned. A disinclination to host an event is unlikely to be covered.
Government announcements
To answer concerns about the lack of insurance coverage, the UK Chancellor, Rishi Sunak, announced on 17 March 2020 that businesses in the retail, hospitality and leisure sectors, which have pandemic cover will be able to claim under their insurance. This is because it has been agreed with insurers that the government’s advice to avoid bars, restaurants, clubs etc. is enough to trigger the policy, which normally would only be triggered on a forced closure.
Businesses in this sector without insurance will pay no business rates this year (if they have a rateable value of less than £51,000) and can access a grant of up to £25,000. There will also be a 12-month business rate holiday for all businesses in the sector, regardless of their rateable value.
Further details are awaited, and we are yet to see whether such inventions regarding insurance will be applied to other sectors, although state-backed loans of at least £330bn have been pledged to support businesses.
How we can help
We are helping many businesses to get their insurers to reverse their initial decision to reject business interruption insurance cover. We can review your policy for free. If we think you have a claim, we’ll pursue your insurer. If you lose, you don’t pay anything. If you win, you pay us a pre-agreed fee. Get in touch here.
