There is a lot of confusion about whether firms with business interruption can claim for loss caused by the Coronavirus (COVID-19) pandemic. The Government have indicated that the advice to avoid pubs, theatres etc is sufficient to make a claim and that will therefore satisfy the requirements of the policy regarding “notifiable diseases”. However, that is not the end of the story. The Association of British Insurers (ABI) commented on 17 March, “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.”
How are the Government’s assurances and the ABI’s clarification compatible? The answer is that most policies cover for consequential loss including limited cover for business interruption, but that cover is secondary and dependent on a primary head of claim such as damage to the insured building. This type of policy will for instance cover you if your business is closed down because of an outbreak of legionella caused by a leaking pipe which has been damaged by careless workmen but is not designed to cover business interruption caused by a worldwide pandemic which is completely unassociated with the insured property.
There are policies that will cover business interruption caused by the Government’s measures to cope with Covid-19 but as the ABI says they are a minority and even when the policy wording seems to cover business interruption the detail belies that conclusion.
If you are a business owner concerned about the impact COVID-19 will have on your organisation, you can contact our specialist commercial and corporate solicitors in Bristol or London for support and advice. Call 0117 906 9400 or email email@example.com