Coronavirus: Further Information and Questions Answered
The spread of Coronavirus is an unprecedented global crisis. We too are a small business and can appreciate this is an incredibly difficult time for our client’s families and businesses as people seek to make the right decisions for their own health and that of their family.
It is also a time when clients are questioning these circumstances and what their insurance covers them for. Standard business insurance policies are designed and priced to cover standard risks and are therefore very unlikely to provide cover for the effects of global pandemics like Covid-19. This includes forced closure by the authorities.
We have business continuity plans in place, and we are supporting and advising our clients round the clock.
If you have any questions about your cover, please refer to your policy wording in the first instance, if this does not provide clarity then please get in touch with us via email at firstname.lastname@example.org or by calling us on (01924) 499182, during office hours, and we will endeavour to assist. We do please ask for your patience at this challenging time.
Below are some further Questions and Answers that may be useful:
What is business interruption insurance?
- Business interruption insurance covers a business for loss of income during periods when they cannot carry out business as usual due to an unexpected event arising from a set of perils that will generally be specified in the policy. It aims to replace certain losses sustained by the business during the period of the disruption.
- The insurance may compensate the business for any increased running costs and/or shortfall in profits as the result of the event, up to certain limit that is set out in the policy.
What do business interruption policies generally cover?
- Most policies will provide cover if the premises or equipment are damaged by a named peril, such as a fire, flood or storm, and also often for the breakdown of essential equipment.
- Some policies may also cover business interruption as a result of people not being able to access the business due to a specific circumstances (such as the police cordoning off an area due to an event such as terrorism, a fire, or the risk of a collapsing building etc). In many cases this is known as ‘restricted access’ cover or ‘non-damage business interruption’ cover and is usually an add on to a standard policy that can cost more.
How do businesses purchase business interruption cover?
- Business interruption insurance is usually offered as an optional extra to business insurance packages, which combine a number of different policies under one premium. It can also be offered as an optional extra to buildings and contents insurance policies in some cases. Most businesses purchase a package of insurance from a broker who will work with them to ensure that they have the appropriate cover for their needs.
Does standard business interruption insurance provide cover for businesses who are not able to operate due to the effects of Covid-19?
- Standard business insurance policies are designed and priced to cover standard risks and are therefore very unlikely to provide cover for the effects of global pandemics like Covid-19. This includes forced closure by the authorities. Businesses may have chosen to purchase cover that will specifically provide for business interruption arising from notifiable or infectious diseases. For certain notifiable disease extensions cover may apply if other policy conditions are met. However, this type of extension is not commonly included as standard. Furthermore, the likely costs to businesses of cover that would include more unusual risks – such as those posed by new diseases – would be prohibitive.
- Businesses who are concerned about the impacts of Covid-19 should check the scope of their cover, and check with their insurance adviser or broker.
Does a ‘notifiable disease’ extension to business interruption cover my business for Covid-19?
- Most notifiable disease extensions tend to cover specific diseases that will be named in the cover. If Covid-19 is not specified, then cover may not apply.
- Some notifiable disease extensions are more general and do not specify certain diseases. In these cases, business interruption cover for Covid-19 may apply if Covid-19 is present in the business.
- If you are unsure about what your policy covers your business for, check with the broker you purchased the policy from or your insurer if you purchased it directly.
Are there any other extensions to business interruption that may provide cover?
- Some coverage may exist if the business has purchased a ‘non-damage, denial of access’ extension to a business interruption policy. Again, purchase of these extensions tends to be rare and this is not generally covered under standard business interruption policies.
- Generally, ‘denial of access’ cover applies to cordoned off areas and loss of trade resulting from a denial of access to the premises (e.g. as a result of a police cordon). If a business is forced to close or is told to close by an appropriate authority or is cordoned off, this could trigger a claim under a ‘non-damage, denial of access’ business interruption extension if the infectious disease cover is unspecified or if it includes Covid-19.
You can find up-to-date travel advice on the Government’s website. This includes information on steps to take for those who have essential travel, and further consular advice.
What should I do about travelling?
- The Foreign and Commonwealth Office has advised against all but essential travel for 30 days from 17 March 2020. This unprecedented step actually provides welcome clarity for customers and the industry. Generally, insurance cancellation or travel disruption will relate to FCO advice. This decision will therefore allow many (or ”the majority of”) policyholders with cancellation or travel disruption cover in place to claim for cancelled trips that were already booked and cannot now go ahead.
- Looking ahead, if this advice is lifted after 30 days but still applies to the destination you were planning to visit, then you may be able to claim under your travel insurance policy (again, provided you have the relevant cancellation or travel disruption cover in place).
- If you make alternative travel plans, then you may be able to transfer your travel insurance to cover your new destination.
- Travel insurance policies may cover some out-of-pocket losses, and also help you to leave the area and return back to the UK if you are advised to do so, and if you are unable to get assistance from any other source.
If I ignore any government advice against all but essential travel, will my travel insurance still cover me?
- If you travel against government advice, then you may invalidate your travel insurance. If you are unsure check with your travel insurer.
What would be classed as ‘essential’ travel?
- You should check with your travel insurer if the reasons for your trip would or would not invalidate your travel insurance. A holiday to the area would not be considered as essential.
If I cancel my travel plans can I claim any cancellation costs on my travel insurance?
- Travel insurance may cover non-refundable cancellation costs, in specific circumstances. These may include medical advice against you or a member of your group from travelling or government advice against travelling. Check your travel insurance policy for the scope of cover. Travel insurance is not designed to cover the situation where you choose not to travel, but the FCO advice has not changed to advise against travel.
If I am in an area and the Government advice is to return home, will my travel insurer cover any additional costs I incur in getting back to the UK?
- Travel insurance policies may cover some out-of-pocket losses, and also help you to leave the area if a warning to return back to the UK comes into effect while you are there, if you are unable to get assistance from any other source. You should keep up to date with government advice on the FCO website.
If I cancel my travel plans can I claim any cancellation costs on my travel insurance?
- Travel insurance may cover non-refundable cancellation costs, in specific circumstances. These circumstances may include medical advice against you or a member of your group from travelling or government advice against travelling. Check your travel insurance policy for the scope of cover. Travel insurance is not designed to cover the situation where you choose not to travel, without the Foreign Office also advising against it. The Foreign Office is currently advising against all but essential travel outside of the UK.
Will my travel insurance cover me if I have to self-isolate and can’t travel?
- Travel insurers understand that people doing the right thing by self-isolating in line with government and WHO advice may not be able to travel. If you have cancellation cover within your travel insurance, insurers will consider a cancellation claim if you can prove that you need to self-isolate.
- Talk to your insurer if you are not sure how to prove that you need to self-isolate. One way to do so, may be to get an isolation note from the NHS website.
Will my home insurance policy be affected if I have not told my insurer that I’m working from home?
- Working from home, due to the need to self-isolate should be covered by standard home insurance policies, assuming that the work is clerical in nature.
- If individuals are working from home and receiving visitors to their home on business matters, they should check with their insurer. In some cases, there may be some restrictions in cover, such as loss of money and theft being excluded unless there is evidence of forcible and violent entry to the property.
- The business equipment used (e.g. Laptop) is likely not to be covered. However, in most cases the employer would be liable for ensuring their equipment is insured away from the office.
- If you are unsure, please let us know and we can advise.