Coronavirus and business insurance
What insurance policies cover businesses against vary enormously. Every policy can be subtly (or dramatically) different making it essential to check what the policy says or to check with your insurance broker what cover is in place. Because of these differences there is not a single answer to businesses queries. A discussion around your own policy document is perhaps the only way to get clarity.
However, we outline below some information in general terms about how policies may operate.
Insurances that might be directly affected by Coronavirus:
Business interruption
Business interruption is designed to protect businesses against loss of profits or revenues if they are unable to continue trading due to an insured cause.
Usually the insured cause will be in respect of damage to the premises such as due to fire or flood.
Additional cover can be added that will cover business interruption if there is no damage to the premises. These are unlikely to be available on simple package policies.
The additional cover can include what is known as Denial of Access and may include denial of access to the premises because of infectious diseases. Insurance policies will treat such optional covers differently.
Some policies will only cover denial of access due to diseases specified in the policy. This means that even if you have the extension, it is highly likely that there will not be cover against closure due to Covid-19. This is because the disease is so new and has spread so rapidly that insurers will not have added it to their list.
Some policies may be extended to include any infectious disease. This is far less common and is most likely to be added to a hotel, restaurant or supermarket cover.
It is essential to understand that the fact that Government has named Covid-19 as notifiable and the World Health Organisation declared a pandemic makes no difference to the cover you have. However, if you do have infectious/contagious or notifiable disease cover or pandemic insurance in your policy the action taken by Government currently, as confirmed in the Chancellor’s statement on 17 March 2020 is enough for insurers to consider claims under those sections.
A Denial of Access extension may also include cover for interruption caused by the acts of Public Authorities, imposing for example a lockdown on the premises. This may cover infectious diseases but may be limited to a certain radius around your premises which won’t in most circumstances include the closure of the likes of airports or other major links.
Some policies can be extended to cover incidents that happen to your suppliers or customers premises that are named in the policy and these may also include Denial of Access due to infection diseases. This type of cover will have the same restrictions as described above.
If you do not already have cover that includes Covid-19 or Coronavirus it will not be available now as insurers are treating this as a ‘known event’.
Event cancellation insurance
If you have bought insurance to cover cancellation of events that you hold, though these often cover cancellation ‘due to any cause’ there will be exclusions and limitations in the policy. Many will state that there needs to be Government or Public Authority action that closes a venue or otherwise bans the event – not just fear of an infectious disease or concerns about reduced attendance. All insurers will have different wordings and conditions, so it is important to check your policy.
New event cancellation policies will exclude losses arising from Coronavirus.