Unfortunately, most insurers are rejecting business interruption claims owing to coronavirus. Many policies only cover business interruption resulting from physical property damage, which is often the case for combined packages where business interruption is an extension of property insurance. Other policies exclude pandemics outright.
Whether your company has cover or not will ultimately come down to the wording of your policy and the position of your insurer. There are three main types of policy extension to look out for if you are hoping to get cover from your insurance provider during the pandemic.
Notifiable disease or specified disease extensions offer cover for any financial losses caused by infectious diseases. Not many policies include this as standard, and not many companies choose to add this feature when taking out a policy. On top of this, although many policies cover ‘notifiable diseases’, most of these insurers list the specific diseases which they cover under this feature.
Unfortunately, following the SARS outbreak in 2002, more and more policies do not extend coverage to new notifiable diseases which may emerge, such as Covid-19, or indeed any infectious disease at all.
Several insurers include cover for ‘notifiable diseases’ which aren’t explicitly specified. In these cases, policyholders may be able to make a claim. On 5 March 2020, the government formally declared Covid-19 to be a notifiable disease, in an attempt to facilitate insurance claims made by companies affected by coronavirus.
However, even in these cases, it can be difficult to submit a claim successfully. Policies tend only to apply when the disease is present at the premises, which has been the root cause of many disputes over coronavirus-related claims between policyholders and insurers.
Non-damage denial of access
This type of extension covers companies when they cannot access their premises, for reasons other than physical damage to the property. Many policies include cases where an authoritative body has ordered a business to close temporarily.
This means that non-essential businesses which were ordered to close by the government due to Covid-19 lockdown measures may be able to claim their financial losses incurred while they were closed.
Loss of attraction
This kind of extension to a business interruption insurance policy can offer cover when an event negatively impacts revenue. If a local incident triggers the number of customers visiting a business’ premises to drop, for example, the company may be able to claim for the loss of revenue caused by this event. Firms with this extension in their policy might be able to claim for reduced income owing to coronavirus.
If your policy includes any of these extensions, you might find yourself in a position to make a claim. To maximise your chances of your business insurance provider accepting your claim, the first thing you should do if you have a business interruption insurance policy is to notify your insurer of your circumstances as quickly as possible.
Next, you must provide financial records showing the loss of revenue caused by the government’s measures, such as fall in demand, absence of staff, enforced closure or reduced services from suppliers. You should also provide records of decisions that your business took in response to the pandemic, as well as evidence of any additional expenditure your company incurred.
Coronavirus and business interruption insurance
Covid-19 has thrown up an unprecedented situation for hundreds of countries, affecting millions of people worldwide. Many businesses have found themselves unable to trade during the pandemic, whether that’s due to government-enforced closures, a lack of funds to pay staff, or simply a sharp drop in sales. Many companies are turning to their business interruption insurance policies for support recovering loss of income.
Alternative funding for companies affected by coronavirus
Many businesses have had their claims rejected and are struggling to stay afloat. However, the government is offering a business interruption loan scheme for companies who have suffered substantial losses owing to business interruption as a result of coronavirus. UK-based SMEs can apply for an interest-free loan up to a maximum of £5 million. Businesses with an annual turnover of less than £45 million are eligible to borrow money for up to six years from a range of specialist lenders and high street banks.