Many businesses across the UK are seeking guidance and clarity in relation to whether they are able to claim on their business interruption policy due to the impact of the coronavirus on their business operations. It is believed that a number of businesses have already had claims on their policies rejected by insurers.
Below, we have provided some advice to businesses who may be looking to make a claim via their business interruption policy.
Claiming on a business interruption policy due to the effects of the coronavirus
The wording of business interruption provisions vary significantly from insurer to insurer and each form of wording needs to be carefully considered.
At Nelsons, we have seen clauses which are drafted to cover business interruption due to “illness on or at the premises”. On the face of it that wording may be sufficiently wide enough to allow a claim on a policy.
Some clauses cover business interruption caused by a ‘notifiable disease’. As the coronavirus has now been classed as a notifiable disease, without further caveat, losses may well be covered. Cover is also likely to be afforded where there is reference to “an epidemic or pandemic” without any other limitation.
However, many policies provide cover where business interruption is caused by a disease which has been specifically listed in the policy and these policies often exclude from cover new and emerging diseases. Given that the world only become aware of the coronavirus in December 2019, it is highly unlikely that any policy of this type will cover current business interruption.
Non-damage denial of access cover
It may be worth looking to see if there is a more general provision in the policy, such as a non-damage denial of access clause which typically covers losses arising from ‘an incident’. Under such a non-damage denial of access extension, the losses arising to the business as a direct result of such denial of access due to the coronavirus could be covered by the policy.
There are differing legal views as to whether this type of clause is triggered by a pandemic and whether, if it is, there has to have been an outbreak at the business premises or within a specified proximity of the business premises to be able to make a claim. Again the precise wording will be important.
Keep evidence of how the coronavirus has impacted your business
Finally, if you believe you do have business interruption cover, it is important that the senior management of the business start to keep careful documentary evidence of the way in which the business has been interrupted by the coronavirus and the amount of the losses incurred.
If you are at all unsure about your business’ insurance position and need assistance or if you are already in a dispute with your insurer, our experts are here to help.
How Nelsons can help
If you would like further advice in relation to the subjects discussed in this article, please contact Cathryn or another member of our expert team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.