There are a lot of sweeping and pessimistic comments in the media right now about concerns over businesses being able to obtain pay-outs from their insurers. Here’s what you need to know.
1. Check whether you’re covered for business interruption. It is most often written as an add on to a property damage policy and will cover your business for loss of income during periods when you’re unable to carry out business as usual.
2. Check the level of cover. Some businesses trade from multiple premises and policies vary as to whether the total level of cover relates to one premises or all of them.
3. Don’t be put off by generic views – only what is contained in your insurance policy is relevant.
4. The catastrophic effect on the insurance market having to pay out potentially millions of claims is irrelevant to whether they should settle your claim. The key is what your contract says.
5. Any ambiguity in the contract is resolved in your favour and would be construed against your insurer.
6. Only facts known to both parties are relevant – the chances are that your insurer wouldn’t have known of COVID-19 when your policy was written but you can’t be expected to have known about it either.
7. Some insurers argue that their policy only covers specific outbreaks of the virus on or near the business premises. This ignores the prohibition on use of your premises, the closure of your business, and resultant loss of income, due to the enforced lockdown.
8. “Loss” and “damage” are words which have a variety of meanings depending on the context in which they are used. The construction of such words in your insurance policy is likely to determine whether your insurer should pay out. Don’t just accept their interpretation of your policy.
9. The Association of British Insurers have intimated that “notifiable or infectious disease” extensions in a policy usually only list “specific diseases which are covered, not any notifiable disease that may emerge, such as COVID-19.” This ignores the whole purpose of policies of this nature. Regardless of the specific viral threat, you have been prevented from trading and have suffered a loss of income as a direct consequence of an enforced lockdown beyond your control.
10. The ABI’s website misquotes the FCA’s letter to insurance CEOs dated 15 April 2020, when it states “the FCA said: “most policies have basic cover” and “do not cover pandemics, and insurers have no obligation to pay out in relation to the COVID-19 pandemic.” The FCA’s letter actually contained an important caveat (and more generic comment): “Based on our conversations with the industry to date, our estimate is that most policies have basic cover…” Now is not the time for generic comments, estimates or assumptions.
To check whether you ought to be covered, we can review your policy for free. If we think you have a claim, we’ll pursue your insurer. If you lose, you don’t pay anything. If you win, you pay us a pre-agreed fee.
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