The spread of the Covid-19 Coronavirus is beginning to affect every element of daily life and commercial activity. Many businesses will suffer from the precautions and impositions that have been put in place in order to prevent the spread of the Covid-19 virus, and it is fair to ask, ‘Am I covered?’
The wordings and conditions on policies vary and each case may have to be discussed on its own merits.
Business interruption insurance covers businesses for a loss of income during periods when they cannot carry out business as usual due to an insured event (such as fire or flood). It aims to put you back in the same trading position it was in before the event occurred.
BI cover will usually only be triggered where property damage has occurred which is unlikely to be relevant in these circumstances.
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Some policies may be extended to cover instances of interruption that are not a consequence of physical damage, but the availability of cover will be entirely dependent on the specific wording of your policy.
Unfortunately, coverage as a result of Covid-19 is likely to be rare. The UK Government has declared that Covid-19 is a notifiable disease, but it does not mean that coronavirus-related losses will be covered under the business interruption extension. In many standard contracts, there is no cover under the specified diseases extension as Covid-19 is not one of specified diseases covered.
Some infectious disease extensions are broader and do not specify the diseases but insist on them being notifiable.
If coverage is afforded, there would be applicable sub-limit contained in the policy, usually restricting to a maximum of £50,000 or £100,000. In addition, a lot of policies require there to be an outbreak at the business’ premises or within a specified proximity of the business premise (e.g. 10-mile radius).
Denial of access
Some policies include a ‘non-damage denial of access’ extension. If your business is forced to close or is told to close by a local authority/cordoned off, you may be able to make a claim under this extension. It is important to note that a lot of policies require there to be an outbreak at the business premises or within a specified proximity (e.g. 10-mile radius) of the business premises for you to be able to make a claim.
Closure of your business
Recent coverage in the media has suggested that insurance policies will kick in should the Government force closure of the premises. Unfortunately, this is not the case for most businesses.
The ABI has today released the following statement:
“Irrespective of whether or not the Government orders closure of a business, the vast majority of firms won’t have purchased cover that will enable them to claim on their insurance to compensate for their businesses being closed by the Covid-19.
Standard business interruption cover – the type that the majority of businesses purchase – does not include forced closure by authorities as it is intended to respond to physical damage at the property which results in the business being unable to continue to trade.
A small minority of typically larger firms might have purchased an extension to their cover for closure due to any infectious disease. In this instance, an enforced closure could help them make a claim, but this will depend on the precise nature of the cover they have so they should check with their insurer or broker to see if they are covered.”
Event cancellation insurance
If your policy includes communicable diseases and the government or a public authority forces you to cancel an event, you may be able to claim for irrecoverable loss of costs or revenues. Conditions will vary so individual policies would need to be looked at.
Coronavirus is now a standard market exclusion on new event cancellation policies.
We have undertaken a review of the market and can tell you that Axa, Allianz, Covea, Aviva, NIG, Arch and Travelers have all confirmed that Covid-19 would not be covered under the Business Interruption section of their policies. Where these Insurers do provide a Notifiable Disease extension, it would be on a specified basis and therefore exclude Covid-19.
Government support for businesses
The government introduced a several measures in the recent budget to support businesses experiencing increases in costs or financial disruptions. Measures include:
- A Coronavirus Business Interruption Loan Scheme will enable businesses with a turnover of no more than £41 million to apply for a loan of up to £1.2 million.
- For businesses with fewer than 250 employees, the cost of providing 14 days of statutory sick pay per employee will be refunded by the government in full.
- Additional £2.2 billion funding support for those small businesses that pay little or no Business Rates because of Small Business Rate Relief (SBBR)
- A dedicated helpline has been set up to help businesses and self-employed individuals in financial distress and with outstanding tax liabilities receive support with their tax affairs.
You can find out about this support in more detail on the Government website. The dedicated helpline number is 0800 0159 559.