March 30, 2020
Whether or not your insurance policy will pay out in respect of your losses will depend on the type of policy that you have and the specific terms of the policy.
Traditional business interruption insurance
This kind of policy is typically purchased alongside property damage cover. These types of business interruption policies usually require damage to, or loss of, insured property as the trigger to provide cover.
If you try to rely on this kind of policy to claim against coronavirus losses, you may struggle in identifying the physical damage element required in order to make a claim.
However, liability under the policy may be triggered by the “loss of use” of insured property, meaning that you may be covered.
Contingent business interruption insurance
“Contingent” business interruption insurance (usually offered as an extension to traditional business interruption insurance) generally exists to plug gaps not covered by traditional business interruption policies.
These types of policies sometimes offer cover where the trigger is “loss of use” of the property due to the action of civil authorities. For example, this may arguably happen when the Government advises that properties should not be used.
You may also be covered for losses caused by a “notifiable” infectious disease. However, such policies often have an exclusion for avian flu, SARS and foot and mouth disease.
Coronavirus became a notifiable infectious disease on 3 March 2020 in England and Wales. Any losses caused before this date would not therefore be covered.
Liability insurance – protecting your workforce and the public
Business owners could face claims from clients, members of the public and employees, for failure to adequately protect them from contracting coronavirus. Given the current circumstances, this is likely in sectors such as hospitality and travel. Public liability and employer’s liability insurance policies are likely to cover such claims.
Cancellation and abandonment insurance – covering your events
There has also been widespread cancelling of events, ranging from business conferences to sporting and music events.
Cancellation and abandonment insurance usually covers irrecoverable expenses and loss of net profit should an event be cancelled for a reason that is not excluded by the policy.
However, policies often have exclusions for cancellation caused by specifically named diseases (for example, avian flu, swine flu, etc.) or because of quarantine or restriction of movement imposed by a civil authority as a result of a communicable disease. Therefore, you should check your policy wording if you are considering a claim or may wish to rely on the policy.
What should you do now?
As with most insurance, whether or not you will be covered depends on the type of policy that you have and the specific policy wording. It is therefore essential that you have your policies reviewed so that you can understand and manage your current and future coronavirus related risks.
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