Every person in the country is being affected by coronavirus (Covid-19) and many businesses are suffering losses and face an unspecified amount of time of complete uncertainty.
In the case of losing takings and paying additional costs in relation to the Covid-19 outbreak, can businesses claim on their insurance?
Which businesses are suffering losses to Covid-19?
Organisations are doing the best they can to adapt as quickly as possible to facilitate remote working, help employees to take care of children, assist customers and to change their offering to best suit the marketplace but many will still have huge losses.
The government has now officially ordered the closure of:
- Food and drink venues with consumption on-site
- Pubs, bars, and nightclubs
- Entertainment venues like cinemas, theatres and bingo halls
- Museums and galleries
- Spas and wellness centres
- Casinos and betting shops
- All indoor leisure and sporting facilities including gyms
And this still leaves many businesses with the ambiguity of whether they should continue to trade or not and whether they should send their staff home if remote working isn’t an option.
What business insurance will cover Covid-19 losses?
According to advice from the Association of British Insurers (AIB), not many businesses will have purchased insurance that covers losses due to an infectious disease, particularly not that of the Covid-19 pandemic. Many insurers will make you state the name of the infectious disease(s) that you want to cover for when you take out the insurance and Covid-19 is a new virus.
The AIB said, “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 business being closed by the coronavirus.”
Business interruption insurance
Generally, business interruption insurance will need to have been specifically requested to be added on to a business insurance package and even this will normally just cover if the premises or equipment is damaged by fire, flood or storms of if essential equipment breaks down.
Your business might be entitled to claim if it has bought a ‘non-damage, denial of access’ extension to a business interruption policy if infectious diseases are unspecified, or you have included ‘notifiable diseases’ (which Covid-19 has been made by the government) or if you have specifically included Covid-19. And your business should be covered if it has cover for both pandemics and government-ordered closure (if it has been ordered to close).
If you are in any doubt you should check your policy documents and with your insurance broker as to what cover you have.
What to do if your business isn’t covered by insurance?
If like most businesses you don’t have any relevant cover, you may be able to take advantage of the government schemes to support businesses and individuals including:
- Business loans that are interest-free for 12 months (extended from 6 months).
- The paying of 80% of wages up to £2,500 a month for workers who aren’t working but are kept on the payroll.
- A 100% business rates holiday for hospitality, retail and leisure businesses.
- An increase in the grants available to small businesses and to retail, leisure and hospitality.
- Mortgage holidays of up to three months for individuals.
- If your business has been ordered to close, you should be covered by insurance if you have cover which states pandemics and government-ordered closure.
- Check with your policy documents and your insurance broker as to what your cover states.
- Most businesses don’t have the relevant business interruption insurance with the specific terms required.
- Check if you are entitled to assistance from one of the government help schemes for businesses and individuals. These are likely to be updated and added to as the situation changes.
- Coronavirus help and information from the AAT
- Covid-19 government guidance for employers, employees and businesses
- Covid-19 government support for businesses
Sophie Cross is a freelance writer and marketer specialising in business and travel. She is the editor for London Revealed magazine and her clients include lastminute.com Group and Merlin Entertainments.