Business Interruption Insurance and COVID-19

Posted 18/03/2020

In light of the recent outbreak of COVID-19 (Coronavirus) many customers are approaching us for comment at what is an understandably difficult time.

This is a constantly evolving situation, but we have compiled some advice and guidance below, which we hope will be of assistance in moving forward.

Am I Covered?

For many of our customers, the first thing they want to know is whether they have any insurance cover in place that will operate as a result of COVID-19.

For the vast majority of you the short answer is no.

Inaccurate media coverage and social commentary is leading many people to assume that they may have business interruption cover that will pay for loss of revenue or profits following an outbreak near or at the premises or forced closure by the government. But this is not the case.

Standard business interruption cover is primarily there to provide protection following physical damage to an insured premise, such as fire or theft, and although some insurers will provide cover for loss of income following an outbreak of disease, this is often limited or subject to certain criteria.

In particular, it’s important to note that many insurers will only provide coverage for an outbreak of a specified disease. The policy wording that accompanies your policy will include a list of these specified diseases, but they will not include COVID-19 as, until very recently, it was completely unheard of.

Some insurers will refer to a notifiable disease. This is a disease that the government require all cases of to be notified to relevant public bodies. COVID-19 was declared a notifiable disease in March 2020 (February in Scotland). However, these policies will usually state that cover is dependent on an outbreak at the premises, or within a specific geographical range (i.e. a diagnosed case within 1 mile of the premises).

This cover has been traditionally included within policies in light of localised outbreaks of disease. Such as legionella, salmonella and the like. It was not designed to operate in respect of a national epidemic. Some insurers specifically exclude epidemics within their policies. Those that didn’t and who did offer limited cover are now invoking force majeure as they would be financially unable to settle the volume of claims expected following the outbreak of COVID-19.

What Can I Do?

From an operational point of view, we strongly recommend drafting an internal policy which outlines to all staff how you will react in the event of an outbreak of disease.

We suggest that this document includes details on what to do if an employee or customer has been exposed to COVID-19, what to do if returning from an infected country, how you will minimise customer contact, changes to working practices (such as reducing staff at certain locations or working from home), procedures for self-isolation, enhanced cleaning procedures and the like.

At this stage of the outbreak we would reiterate government advice to practice social distancing where possible and discourage any large gatherings.

Is There Any Help Available?

This is an evolving situation and the guidance and help available is constantly changing. The government has already announced a number of measures to assist businesses and individuals including:

  • Reclaiming up to two weeks Statutory Sick Pay for employees affected by COVID-19.
  • Increase in Business Rates Retail Discount to 100% for one year
  • A Coronavirus Business Interruption Loan Scheme
  • Help for businesses and self-employed people with outstanding tax liabilities

Details of the above and more can be found by downloading the following document from the government website:

We recommend visiting regularly to stay up to date with additional business support that may become available as the virus progresses.

We’re Here to Help

Although your policy may not cover loss of income due to COVID-19, it does continue to operate as usual. Should you require any help or guidance with any aspect of your insurance at any time, do not hesitate to contact us.

We would ask that any contact be made via phone or email in the first instance as we are currently asking customers not to visit our offices unless strictly necessary.

We will try our very best to continue to provide you with the customer service you expect and deserve throughout this epidemic, but please bear with us if handling any request takes longer than usual.

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Business Interruption Insurance and COVID-19
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