In his speech on 17 March, the Chancellor referred to insurance in these terms:
“Following the changed medical advice yesterday, there are concerns about the impact on pubs, clubs, theatres and other hospitality, leisure and retail venues. Let me confirm that, for those businesses which do have a policy that covers pandemics, the government’s action is sufficient and will allow businesses to make an insurance claim against their policy. But many of those businesses don’t have insurance – so we will go further.”
The ABI (Association of British Insurers) responded to those comments :
"The Chancellor's statement today is consistent with our statement this morning where we said in the event businesses have the right cover, this type of notification could help make a claim. But, as the Chancellor acknowledged, the vast majority won’t have purchased extended cover and this remains unchanged."
In most policies covering Business Interruption (“BI”), the cover is triggered when there is material damage to the Property Insured. The definition of Damage will generally involve physical loss of or damage to property.
Often, there will be Extensions to the standard BI cover. Some of these might look promising at first sight, but do not in fact provide cover for BI losses caused by Coronavirus / Covid-19. In particular, an Extension for Infectious Diseases would generally contain a list of the relevant diseases. The policies that we have reviewed in the past few days do not include Covid-19 or anything of which it might turn out to be a variant.
A Prevention of Access Extension is also unlikely to assist. Cover under some of these are triggered by material damage to the insured property or nearby property. Even if there is no connection with damage, the Extension may say that there is no cover where action is taken by the Government or other competent authority to control, prevent or suppress the spread of any disease.
Everything turns on the wording of the particular insurance policies. Please speak to your brokers, insurers or us if you need guidance on whether you have Business Interruption cover to assist you in these difficult times.