No-one can have predicted the scale of the economic impact of the government’s restrictions. Some very bleak forecasts are being reported in the press today (15 April 2020).
Prudent business owners and managers will have planned ahead for the possibility of there being difficult times and some will have taken out insurance cover for business interruption.
Many/most policyholders will already have been in contact with their insurers even though they don’t yet know the full impact of the “lockdown”. If you haven’t yet done so, there is no sense in delaying and you might be risking the insurer avoiding cover if you do not advise it of a claim promptly.
Our offer to you
Since the government first introduced its restrictions, we have been supporting many businesses, whether or not they are our existing clients, by offering them up to 2 hours of free advice to help them with any issues around dealing with the effects of Covid-19.
If you believe you are covered but are experiencing difficulties with your insurer, we would be happy to review your policy documents and provide some preliminary advice on your situation.
In the meantime, here are some of the key issues we are already seeing which you may find helpful:
Is Covid-19 covered?
Due to the fact that Covid-19 was never even heard of until very recently, there is a very high probability that any policy of insurance will not specifically mention Covid-19 by name.
We are seeing some insurers adopt the stance that where their policy wording lists specific diseases for which cover is available any disease not within the list, i.e Covid-19, is not covered.
At the opposite end of the spectrum, we have seen some policy wording that provides cover in the event of there being a notifiable disease. Covid-19 has been added to the UK government’s official list of notifiable diseases.
It remains to be seen (but I have my doubts) whether insurers will accept that the intention, when listing specific diseases (which usually mirror the UK government’s list of notifiable diseases) within the policy, was to include diseases subsequently added to the government’s list.
It is possible, but far from certain (and also a long way in the future relative to the immediate concerns that businesses face), that the courts might interpret policies to mean that Covid-19 is included even where it is not specifically referred to.
Are acts of government covered?
A potential way round the above issue is to see if the policy wording provides cover for the consequences of the government’s restrictions in response to Covid-19 rather than the interruption having to be caused by the disease/virus itself.
What conditions or exclusions might apply?
We are seeing a host of different “loopholes” that insurers may have written into their policy wording.
For instance, the type of interruption that is covered may be limited – some policies may only pay out if access to or use of premises has been disrupted and the manner and/or extent of the disruption may be important.
If you have incurred additional costs, you may only be permitted to claim for them if they have been approved in advance by your insurer (another reason to make contact with them as early as possible).
There will be a whole host of evidential conditions with regard to proving the extent of the losses and/or whether some losses could have been avoided.
The availability and use (or otherwise) of the various schemes and short term reliefs for businesses introduced by the government is likely to be taken into account by insurers as much as possible in order to reduce the amount they pay out in claims. The stance that insurers adopt remains to be seen but it would not be a surprise if settlements by insurers were reduced or refused on the basis that a particular business has not taken full advantage of some form of relief that was available to it from the government.
What should you do now?
There is no question that now is the time to review your insurance policies, if you have not already. Contact your insurance company to find out whether they accept that you have cover in place for business interruption.
If you need some assistance, please don’t hesitate to get in touch with our Head of Litigation, Andrew Farrell on 0161 667 3686 or andrewfarrell@prosperitylaw.com.
