Covid-19 is clearly an unprecedented situation and one that is incredibly fluid and will undoubtedly continue to change in the coming days, weeks and months.
Despite the recent assurances from the government, we are continuing to see and expecting ongoing resistance and/or lack of clarity from insurers regarding business interruption claims for consequential loss, despite the recent assurances from the government in its daily briefings.
Typically, in the UK and rest of the world, physical ‘damage’ needs to occur before business interruption insurance cover is triggered; this also known as the ‘material damage proviso’. A voluntary or mandatory closure as prescribed by the UK Government is typically not covered by most policies due to the lack of ‘damage’. Please see the full statement from the ABI.
We are investigating legal theories that may exist to find coverage, although the stance currently is that it is unlikely a policy will respond on this basis.
However, Covid-19 is unprecedented and the financial and nonfinancial impact, to a large extent, remains unknown. Therefore, whilst the support measures offered by the UK government (including the government-backed coronavirus business interruption loan scheme) are welcomed, they may well decide in the future to take this a step further and compel insurance companies to grant policy coverage in some shape or form.
Alternatively, the UK government may well provide further direct support to UK businesses.
Given the current uncertainty, we suggest the following practical steps:
If you have business interruption insurance for your licensed premises, here is some advice in evidencing a loss and/or presenting a claim:
The documentation that should be gathered for your insurance claim includes information from suppliers that are unable to deliver on their contracts and/or proof of government-mandated closures.
We are lobbying our insurer partners to support and provide concessions, with regards to a number of areas; policy extensions, flexibility and leniency on unoccupancy conditions and seeking clarity around the business interruption cover that may or may not apply to your policy.
We have robust business continuity plans and IT capabilities to handle the increase in people working from home, and the extra calls people will be making too. At times, the lines will naturally be a little busier than usual and we appreciate your patience during these times.
We’re here to help and will keep you informed as further information
is released by our panel of insurers.
Read more about how we are supporting people and businesses during the crisis.
See our specialist pub insurance, bar insurance and nightclub insurance pages for more details of our licensed trade cover.
The Chancellor has set out a package of temporary, timely and targeted measures to support public services, people and businesses through this period of disruption caused by COVID-19. The package of measures to support businesses includes:
Mike Stephens FCII is a respected senior industry professional and Fellow of the Chartered Insurance Institute (CII) with well over 40 years’ varied experience in the commercial insurance sector as a director, underwriter, and operational improvement manager.
Date: May 29, 2020
Category: Trade