Covid-19, as a new virus, and a worldwide pandemic is generally not covered by the vast majority of insurance policies, nor are insurers or premium finance providers likely to provide payment holidays or defer premium payments at this stage. The crisis that we are all experiencing is more a role for the government to step in and alleviate the hardship, similarly to a country going to war. There have been several announcements by the Government over the past few days outlining further initiatives to assist each one of us affected.
• Coronavirus Job Retention Scheme
• Deferring VAT and Income Tax payments
• Statutory Sick Pay relief package for SMEs
• 12-month business rates holiday for all retail, hospitality, leisure and nursery businesses in England
• Small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
• Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
• The Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank (eligibility details and how to apply: )
• A new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans
• The HMRC Time To Pay Scheme
In addition, we have a wide community of clients and business partners who may be able to assist you throughout this period.
Once you have exhausted all of the options listed, and if you still feel that you would like to pursue a claim on your insurance policy, then please e-mail our dedicated claims representative, Debra Breese to assist with your claim firstname.lastname@example.org and we will submit the details on your behalf.
In order to safeguard the health and safety of our employees and their families, we have now temporarily closed our offices, but are working remotely and maintaining normal working hours, so please get in touch using the usual contact details. Like us, many of your business operations will now be being conducted remotely.
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.
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.
Notifiable Diseases – 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 Association of British Insurers has 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.
GOVERNMENT SUPPORT FOR BUSINESS
The government introduced 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
- A number of private lenders are also making funds available to small businesses impacted by Covid-19, including £2 billion from Lloyds Banking Group and £5 billion from NatWest.
EMPLOYERS & PUBLIC LIABILITY
Liability cover provides protection for the policyholder against their legal liabilities to their employees or the public. This includes property damage and Bodily Injury; Bodily injury includes Illness (including resulting death). ‘Illness’ is not defined so could include legal liabilities incurred from COVID-19 in a situation where the insured has breached their duty of care.
For a breach of duty of care to be considered, the insured would need to be in contravention of any government guidelines or advice regarding safety at work or travel.
- By sending an employee to an area affected where the FCO have advised against all but essential travel
- Not providing essential equipment or guidelines for adequate sanitation
- By making an employee come to work after they have travelled in an affected area resulting in others becoming exposed to the virus (either employees or the public).
To help avoid scenarios like these, you could consider establishing whether you have an up to date risk assessment and updated health and safety guidelines that include COVID-19, as well as an up to date business continuity plan. If in place, this should also be reviewed regularly as both the situation and government advice continues to evolve rapidly.
If you currently have a standalone travel policy or an add on cover, and are due to travel to areas where there is a Foreign and Commonwealth Office (FCO) advisory notice in place (no travel / none but essential travel) and wish to cancel your trip, most insurers will cover this.
You would also be covered under policies if you were to contract COVID-19 whilst on holiday or in the UK prior to travel (which was booked before they were aware of the infection).
In addition to this, you would also be covered if quarantined by authorities whilst on holiday (whether you have contracted COVID-19 or not).
If, however, you bought your policy after the FCO advised against travel to your destination, you would not be covered for cancellation/abandonment under these circumstances.
We recommend that you contact us to review your policy wording for full details of cover and to look at your individual circumstances if you have travel plans booked.
Please note that several insurers have temporarily stopped offering new Travel Insurance policies.
MANAGEMENT LIABILITY/DIRECTORS & OFFICERS LIABILITY
Management Liability (aka D&O cover) provides cover in the event a business Director commits a ‘Wrongful Act’. For this to be considered, you would have to show negligence in your actions that leads to a detriment suffered by either a third party or an employee.
Wrongful acts are split between those that cover the general duties and those connected to employment.
The core cover is for Directors & Officers (general and employment matters), with optional ‘Corporate Legal Liability’ cover (claims made against the Co. rather than the Directors) and optional ‘Employment Practices Liability’ cover (Employee grievance claims made against the Co.)
COVID-19 related issues may be included under Management Liability/D&O cover.
Please note that most policies of this nature will have a Legal/HR Helpline, which you should contact for any advice and to ensure that you are taking the correct procedures.
If you have a query, then please contact us directly and we can address your specific concerns and individual circumstances and can provide the contact details for the relevant insurers.
WORKING FROM HOME & TEMPORARY REMOVAL OF CONTENTS/COMPUTERS
If you or your team are planning to work from home during Covid-19 we need to make sure that if you are taking equipment away from your own premises, they are covered should a loss occur.
Please notify us as each insurers policy/limits/cover will be different. We can then advise whether cover is in place.
As ever our best advice to our clients is to act as a prudent uninsured – taking the necessary steps to protect your organisation and its people – then engage with us to review areas of recoverability under your policies.
Please contact your usual Account Executive or call us on 0121 585 5725 if you have any concerns.