The current coronavirus outbreak is a headache for businesses and insurance providers. While insurers are busy worrying about the costs of any potential pay-outs, many businesses are struggling to stay afloat.

Step one for business owners should be to review their insurance policies to determine if they have cover, especially if they anticipate losses stemming from the coronavirus.

There are nearly always provisions in insurance policies that put obligations on businesses to notify their insurer of any potential claims in a certain timeframe. These are joined by obligations on the business to mitigate (i.e. lessen) any losses.

What to look for?

Businesses should also look for obligations in their policies which require them to consult with their insurer before they take any actions. It is key to identify these issues as early as possible to reduce any risk of a failed insurance claim.

Standard insurance policies covering business interruption would be unlikely to include pandemics. However, this is sometimes added to an ‘all-risk policy‘ or a business property insurance plan. This would normally cover loss of income that the business incurs as a direct result of physical damage to its insured property.

This would mean that an insurer is unable to claim under its business interruption insurance policy if coronavirus has not caused any physical loss.

All businesses will need to review their policy wording or instruct a law firm such as Britton and Time Solicitors to do so.

Broader cover can be provided in business interruption policies. This usually appears as an extension for interruption caused by a non-physical event.

What is available to businesses affected by coronavirus?

Specialist and bespoke contingency cover and sometimes events insurance is also available. This type of insurance provides for losses result from:

  1. Postponement,
  2. Cancellation,
  3. Abandonment, or
  4. Interruption of particular events.

Where we find that this cover is in place, we advise insurers to carefully consider the prompts for cover. To do this, we would look for clauses that deal with losses resulting from an outbreak like coronavirus, or look for clauses where these losses are expressly excluded.

We see that many of the losses suffered by businesses stem from decisions that have been taken as ‘sensible’ or sometimes ‘precautionary’ measures. Policy holders should now consider their decisions in the context of policy wording.

Certain policies may have high thresholds that must be met for cover to be triggered.

In many cases, insurance cover will not be provided for all categories of loss. Policies may also seek to limit cover in expressed policy exclusions.

What should you do?

Similar to force majeure clauses, a Britton and Time Solicitor would meticulously review any particular policy wording and advise accordingly. If you need us to look at a policy for you, then use the contact us page or call now on 01273 726951.

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