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Business interruption insurance – am I covered for COVID-19?

The speed and impact of the changes wrought by the coronavirus pandemic in the space of just a few days has, for most, upended all we consider normal.

For those in many businesses, the impact of the virus will have seen the collapse of work as they know it.

Some have been directed to close their doors; others have limited opportunity to trade in their usual way given the consequence of the lockdown.

Others have to wade their way through changes in working practices to keep essential services running while still keeping staff safe.

On any view, this is not business as usual.

Can insurance help?

My husband, like many others, is a cautious man: if there’s an insurance policy around, he’ll buy it.

His caution is made for times like this.

“Thank goodness we have business interruption cover” says he, reaching for the policy. On looking at the conditions however, his confidence is misplaced. He, like many others, is finding that cover does not extend to the current circumstances.

Policy terms

For most policies, the trigger for cover is damage to property. So if your business is burnt to the ground or flooded, for example, it kicks in for the interruption caused.

COVID-19 affects people though, not buildings, so this is no help for the consequences of coronavirus.

On the other hand, some policies have terms which specifically cover infections or contagious diseases as well as losses flowing from the inability to use business premises due to restrictions imposed by a public authority.

For the fortunate, this may be framed widely enough to cover the current situation.

For example, if your cover makes reference to a broad category, such as the impact of a notifiable disease, coronavirus may be covered.

Most however, are discovering that the policy lists only specific diseases. Coronavirus is new. It isn’t listed, so its impact on a business isn’t covered.

Rude awakening

There is no market standard insurance wording for cover of this type.

For businesses, it is important at an early stage to review insurance cover to understand whether losses relating to the coronavirus are covered.

Check the specific terms of your insurance policies which may allow claims for business interruption. Speak to your insurers, brokers or legal advisors as necessary. For the fortunate few, insurance may cover, but for vast majority like my husband, a rude awakening awaits.

Karen Cameron

Karen is an experienced litigator and solicitor advocate who regularly appears in the courts throughout Scotland. She specialises in commercial disputes, giving advice and support to those involved in the construction and property sector in particular.

Posted, 30 March 2020 by Karen Cameron
Categories: Coronavirus | Coronavirus and litigation | Insights | Litigation