Coronavirus – are you covered?
Your claims adjuster may argue that your business interruption cover does not apply
The coronavirus crisis has spread confusion as well as a justifiable fear.
With thousands of people affected across the UK, businesses have been forced to close, lockdowns are in place, and we are living under stricter rules ever seen in peacetime.
It is a frightening time for everyone – but if you have a small business to run, there could be severe financial symptoms from the pandemic.
Your business may lose revenue for several reasons. Even if you are not forced to close, customers might not come in and staff may be reluctant to expose themselves to risk. There could be a loss of supply chains, people may be unable to travel to meetings or events, or you may experience delays or changes to the service you’re able to provide.
You might even face additional expenses such as increased staffing costs, the need to make special delivery arrangements and additional costs required by hygiene safety rules.
In some cases, you may be denied access to your business by a police or council edict.
Of course, you may have business interruption insurance to deal with the losses and the costs – but will you actually be able to make a claim?
Will your business interruption insurance cover you?
The simple fact is that your standard insurance policy is unlikely to cover you for loss of income or revenue due to coronavirus. The Association of British Insurers has warned that most businesses only purchase standard commercial insurance policies which provide cover against day to day risks including damage caused by fire, flood, theft and accidents involving employees.
No-one saw the coronavirus crisis coming. If it is not specifically mentioned, your loss adjuster may suggest that you are not covered for it.
But read your policy closely. Some policies may have a Notifiable or Communicable Disease extension - but each claim will need to be dealt with on the merits of the specific policy wording.
The first may relate to the cause or ‘trigger’ of a claim. Normally BI policies apply when there is damage to property or premises and payment is made for that “material damage”.
There are extensions to the cover available, commonly referred to as ‘contingent BI’ covers. These cover notifiable disease and prevention of access due to the order of a competent authority.
These may extend to your Business Interruption cover so that, if you have to shut your business or there is a communicable disease at your premises, you may be covered for loss of revenue.
Cover for notifiable diseases
Sometimes referred to as ‘infectious disease’ (or similar), this cover is typically provided in two forms.
The first lists diseases which are covered in the policy. By definition, only diseases which existed when the policy was written will be included. This means that coronavirus will be excluded.
The second provides cover for loss resulting from notifiable diseases - at the premises or in the vicinity. Interruption resulting from the occurrence needs to be proved to make a claim - it is the impact on the business that is insured against, not the disease itself.
This provides the best chance for making a claim. The Government registered COVID-19 as a notifiable disease in England on 5th March. The Department of Health and Social Care had stated that “this will help companies seek compensation through their insurance policies in the event of any cancellations they may have to make as a result of the spread of the virus”.
But you may still struggle to get a payment with some insurers.
Insurers have, in the past, paid claims that were technically not covered. Terrorist events are one obvious example. With a spate of claims in the offing, the impact on insurers from the coronavirus will be dramatic, and it is to be expected that loss adjusters will argue that cover is not applicable – to avoid creating a dangerous, and costly precedent.
Cover for loss of access
However, there may also be a claim to argue if you cannot access your business. BI cover is available for damage in the vicinity which prevents access to or the use of the premises – such as a road that is closed, or even things like a bridge being out of use. It may also cover prevention of access by the authorities.
Wordings usually require the restriction to be imposed by a local or term ‘competent’ authority.
As with the notifiable disease extension, the loss must flow from the prevention of access for cover to apply.
If your business is in one of the sectors closed by government decree, you may have a valid claim to pursue.
Other grounds for claims
Some BI policies have supplier or customer extensions. These are sometimes poorly defined and might be argued to apply if your supply chain is affected. If you cannot trade because you cannot bring in stock because your supplier is locked down, you may have cause for a claim - but it might be more difficult if there are territorial clauses which exclude suppliers on the other side of the world.
How can you get help?
You may find that you are in conflict with the view of a claims adjuster, and it may not be entirely cynical to suggest that some insurers will tend to delay making a payment for as long as possible.
This could place your business in a very difficult position, unable to generate revenue, and unable to claim the cover which you believe that you have paid for.
At Rangewell, we may be able to find solutions designed to help you deal with the short-term cash flow issues.
If Covid-19 is causing you losses, and your insurer seems reluctant to help, we may be able to secure the funding you need in the form of short-term funding – which can help you stay afloat until your insurer pays, or until you are ready to start trading profitably again.
At Rangewell, we are expert in all types of business finance, and we can help you find the funding that's best for you - whether it is a problem with an insurer or any other business purpose.
During the current crisis, we can provide the quickest way to find the funding you need.
Call us now – our experts are ready to help you with your finance problems during the coronavirus crisis. We understand the pressures you are under – and our service is absolutely free.