COVID-Affected SMEs Take Legal Action Against Insurer

Sixty-nine small business owners are taking action against the insurance company Beazley Group, who are refusing to pay out for business interruption cover, as they claim that their policies were not designed to cover a national lockdown.

The business owners taking action

The Underground Tattoo Studios in Walsall, owned by Serina Russel, is one such business that is taking action against Beazley. Russel has been paying for business interruption insurance for 15 years, at a price of £46 a month, and believed she would be covered when her business had to close during the pandemic.

She told the BBC, "My questions were 'why am I not covered?' When you take out business interruption insurance, it doesn't state you're not covered for a pandemic so you think you're fully covered for everything, in the eventuality of your business closing, which is what it says. The point is if you are closed, if your business is closed, you are covered, otherwise what is the point in having it?"

Left without appropriate cover, the business was closed for 10 months, and Russel instead took out a bounce-back loan, which she is still paying back five years later. However, the business has fortunately been able to survive thanks to its loyal customer base.

Another business that is taking action against Beazley is the Lucy Foster Wellness Clinic, owned by Lucy Foster. Like Russel, Foster was left without the appropriate cover and resorted to taking out a bounce-back loan of £25,000, which she is still paying off.

"Equipment and devices that I've always been able to buy year-on-year, I've literally had to rethink the whole business model and change where I was at," Ms Foster told the BBC. "It's quite hard when you've literally put blood, sweat and tears for years and years. I'm 30 years in the industry and to feel you've had to go back a number of years - it's quite tough."

The 69 small business owners are being represented in their claim by solicitor Chris Guy, who said: "The wording is wide enough in our legal opinion to cover a pandemic. It is a closure by a government as a result of an incident, which caused the denial of access to the property. Covid was an emergency at the time which the government decided they needed to take extreme measures and close these businesses. The wording in this policy in our opinion covers for that."

What this means for you and your business

It’s crucial to make sure you know what you’re covered for and what is excluded when you take out your business interruption policy, so you’re not caught in an tough situation should the worst happen. Using a broker that you can trust can help you in making an informed decision.

It is important to read your policy documentation for full details of coverage limitations and exclusions. To find out more, just give us a call on 0330 828 6337 or visit our dedicated business interruption page.

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems, we recommend that professional advice be sought