Covid-19: Will my business interruption insurance pay out?
We have received a number of enquiries recently from business owners who are concerned that their business will be affected by COVID-19 if they are forced to shut down following Government advice.
What is Business Interruption Insurance?
Some business owners may have Business Interruption Insurance (also known as Business Income Insurance) which seeks to cover the consequential loss of income a business may suffer due to an unexpected disaster or event.
It is already clear that companies offering other types of insurance such as travel or health, will no longer insure against claims arising as a direct result of the current pandemic, where those policies have been taken out following the virus outbreak. We have looked into the position regarding business interruption insurance and in particular the stance that the insurance industry will take or are already taking.
Lisa Cairns in our Dispute Resolution Department has a background in insurance and experience of dealing with business interruption claims on behalf of a major insurer. Lisa has reviewed the situation in order to provide basic guidance to those of you who may be affected by the Coronavirus pandemic.
What is the current position?
Most insurers appear to be stating that they will aim to avoid any claims on policies which did not have specific cover for coronavirus in place prior to the outbreak. Many business interruption policies which provide cover for infectious diseases specifically list by name the diseases that the policy insures against. Covid-19 has only recently been added to the list of notifiable diseases and it is therefore unlikely that this will be specifically listed in the majority of insurance policies.
Whilst this seems a particularly hard stance to take, it is my experience that unless a policy of insurance specifically excludes something, then a claim cannot be immediately declined.
How do I find out if my insurance covers against Covid-19?
- Check the insurance policy and the associated schedule, looking for specific exclusions.
- If you have one, speak to your Insurance Broker.
- If you do not have an insurance broker and are unsure what to do, contact us for further assistance.
How can the Government help?
It is worth noting that media coverage states that the British and US Governments have urged the insurance industry to be flexible over Coronavirus claims for business interruption. This is however only a request, and the insurers do not have to comply.
The UK Government is putting into place financial help for businesses, including help for self-employed individuals. For more information on the help that will be made available, visit the official Government website https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses
The situation is constantly changing and the Government may bring in further protection in due course. However, this post represents our best interpretation of HM Government’s guidance, where applicable, at the time of our writing. Both the content of the post and any guidance it is based upon will be subject to change.
