What will the effect of the Coronavirus be on your business?
What steps could you take to minimise the risk?
Our second business bulletin in the series looks at insurance, a sector that is as varied as it is creative in providing solutions to business owners. The questions that Smarter Business is being asked are:
- Does your business insurance cover you for COVID-19?
- Can I buy insurance now?
There is no single answer to either of the above,
The government and insurance industry confirmed on 17 March 2020 that businesses who are covered for both pandemics and government-ordered closures should be covered for COVID-19. Because all insurance policies differ significantly, it is important to check the terms and conditions of your specific policy and contact your providers if you have any questions.
The first thing to check is if you have bought business interruption cover
Business Interruption Cover: This cover responds on the basis of ‘Damage’ occurring at the premises and preventing access, resulting in the business being unable to trade.
‘Damage’ is an event such as a Fire or Flood, which would be covered by the material damage section of the policy. Prevention of Access may not always occur as a result of Damage,
There are extensions for Specified Illnesses.
These Illnesses are specifically listed in the Policy Wording, which are generally:
‘Specified Illness’ shall mean illness sustained by any person resulting from a food or drink poisoning, or cute Encephalitis, Acute Poliomyelitis, Anthrax, Chickenpox, Cholera, Diphtheria, Dysentery, Leprosy, Leptospirosis, Malaria, Measles, Meningococcal Infection, Mumps, Ophthalmia Neonatorum, Paratyphoid Fever, Plague, Rabies, Rubella, Scarlet Fever, Smallpox, Tetanus, Tuberculosis, Typhoid Fever, Viral Hepatitis, Whooping Cough or Yellow Fever an outbreak of which the competent local authority has stipulated shall be notified to them.
Coronavirus is currently not listed as a specified illness/ disease within the Policy Wording and is not covered.
In some cases there are additional extensions listed within the wording as follows:
Government or Local Authority Action
Loss as insured by this Section resulting from prevention of access to the Premises due to the actions or advice of a government or local authority due to an emergency which is likely to endanger life or property.
These generally exclude infectious diseases but in some cases where the wording is a little looser, there may be some limited cover. Smarter Business suggests that each client checks their policy. Generally though, this is aimed at localised events and not national situations or pandemics.
If you find that COVID-19 can be covered, it doesn’t necessarily mean that it will. Certain events will need to happen before your insurance will agree to pay out:
- Your business is closed by the government or a local authority.
- The Notifiable Disease is present at your premises or within a specified distance of your premises.
Is it possible to switch to an insurer who does cover COVID-19?
And would this be worthwhile?
Unfortunately, even if the policy wording on a new insurance cover does mention COVID-19, you may still be unable to claim if you buy it now. This is because the virus is already present and is no longer an ‘unforeseeable event’, for which insurance is designed.
To find out whether or not you’re covered, get in touch with your insurance company or broker to discuss your options.
We’re in this together
However, your business adapts to the COVID-19, Smarter Business will continue to do everything in our power to offer our clients the very best service across the board. Stay safe, stay sensible and do what you can to help the government, and indeed the world, get through this difficult time.