Insurers denying coronavirus-related business interruption insurance claims represent a huge issue, not just for the hospitality industry but also for a wide range of businesses who have been unable to trade as usual.
As we explained in this article, using the notifiable disease extension is one possible way for businesses that have had a coronavirus case on (or within a certain perimeter of) their premises, to claim business interruption insurance. But it’s not the only way. The situation of each business is unique and policy wordings vary widely. There are also some more sector-specific arguments which may be more relevant to you.
1. You were forced to close
Denial of Access
On 20 March 2020, the UK Government required, under The Health Protection (Coronavirus Restrictions) Regulations 2020, all non-essential shops, restaurants, cafés, public houses, cinemas etc. to close. If you’re in this situation, you may be covered if your policy includes a denial of access extension.
Some businesses have had to completely stop all activity because they can’t operate without customers on their premises. Others have continued to operate but in a different way. Several restaurants are offering takeaway services, gyms are organising online training sessions, entertainment venues like cinemas, museums or concert halls continue to broadcast art albeit digitally. But that doesn’t mean that they can’t claim under their insurance – even if they’re still trading , they may be able to claim under a denial of access clause if it includes restrictions being placed on their premises, not just forced closure.
2. You’re still open, but affected
Depending on the terms of your policy, you may also be able to claim under your business interruption insurance even if your premises are still open. You could argue that as a direct result of the pandemic, your business has suffered from a loss of attraction or from a supplier or customer issue which had impacted your activity.
Loss of Attraction
An example of a loss of attraction clause is one which covers accidental loss, or destruction of, or damage to property, within one mile radius of the premises, which either prevents or hinders the use of the premises, or causes a fall in the number of customers attracted to the premises.
This could for example apply to independent convenience retailers located by petrol stations, or in the middle of town centres. During lockdown, people travel less and therefore there is significantly less passing trade.
Suppliers and Customers
Standard suppliers and customers clauses cover loss caused by damage at suppliers’ and customers’ premises.
If you’re a manufacturer, you can’t produce if one of your suppliers stops supplying. Whether that’s because they were forced to close by the Government, or had to close for a deep-clean after a confirmed case of Covid-19 on their premises, or because they could not stay open and maintain social distancing.
Similarly, you can’t trade if your customers’ premises are shut. Breweries, for example, can’t sell beer to closed pubs, or to events that have been cancelled.
Remember that you will also need to prove a link between whichever clause you rely on and your loss of trade.
We can help
The bottom line is, don’t assume that you’re not covered, and don’t be put off by generic views – only what is contained in your insurance policy is relevant. Whatever sector you operate in, if your business has been affected by the pandemic, it’s worth checking your insurance policy.
At Capital Law, we’ve been helping dozens of businesses in this situation, by reviewing their policies for free. You can send us yours via this short form. If we think you have a claim, we’ll pursue your insurer If you win, you pay us a pre-agreed fee. If you lose, you don’t pay anything.