Recent media coverage had implied that insurance policies would pay out should the government force the closure of business premises. Sadly, in most cases, this isn’t true.
What is Business Interruption Insurance?
Business interruption insurance is a type of insurance policy that covers a business for the loss of income that may be suffered after a disaster.
It differs from property insurance, in that a property insurance policy only covers the physical damage to the business premises, while the additional cover provided by the business interruption insurance covers the profits that would have been earned had the disaster not occurred.
Why aren’t I covered?
The Association of British Insurers (ABI) has conceded that “only a very small minority” of companies, usually only large businesses would purchase any form of cover that includes premises closure due to an infectious disease. “An even smaller number will have cover enabling them to potentially claim on their insurance for the presence or impact of the coronavirus pandemic,” added an ABI spokesperson.
This is because, under most standard insurance contracts, infectious diseases are specified, i.e. each infectious disease covered will be listed in the policy documentation. As COVID-19 is a new virus, it simply won’t feature on the list of specified diseases.
Who might be covered?
Some policies will include a non-damage denial of access clause which can cover losses from ‘an incident’. Insurance policies that include this clause could cover the COVID-19 outbreak on the basis that the business and its customers have been denied access to the business premises. Again, it is vitally important to check your policy wording. Many insurance policies will also require an outbreak of the virus to have happened within the premises, or within close proximity to the premises in order to process a claim.
How can I claim?
Before looking to make a claim, you need to check your policy documents carefully to see what cover you have in place. As the crisis continues, insurance companies are starting to issue statements regarding their stance on the causes in their insurance contracts and are issuing statements on their websites.
RSA – Are dealing with the Coronavirus Outbreak on a case by case basis.
Ageas – Customers are advised to check their policy wording, as each policy is tailored to individual needs.
NIG – Coronavirus is not covered as it does not feature on the list of specific diseases
Zurich – some policies may provide cover. Please check your policy documents
Aviva – The current COVID-19 outbreak is not covered under a significant majority of business interruption policies.
Axa – There are very few policies that cover compulsory closure caused by an infectious disease, as most policies are worded with a specific list. Please check your policy documents.
If you are unsure or would like us to check your policy wording, please contact our commercial insurance team on 01803 659121 or email firstname.lastname@example.org
Should I add business interruption insurance to my policy at renewal?
Though in most cases the COVID-19 outbreak won’t be covered under business interruption insurance, there are many instances in the past when insurance paid claims due to disease-related disasters, including the SARS outbreak, bovine TB and foot and mouth.
The most common causes of business interruption are;
- Fire or explosion
- Natural disaster including flooding
- Cyber incidents
- Machinery breakdown or equipment failure
- Supply chain disruptions
- Loss of electricity or running water
- Crime or vandalism
As a business owner, you should be aware of all the possible causes of business interruption and the insurance options you should consider protecting your business. If you would like for information on business interruption insurance or to obtain a quotation, please call 01803 659121 or email email@example.com