Covid-19 and Insurance

Many businesses are asking their insurer if they are insured for loss of profit following closure due to the coronavirus outbreak. Like everything related to this terrible virus, there is no straightforward answer.

Equally, as many businesses are closed, what cover are insurers providing to closed businesses where there is no trading risk? Insurers are being asked if they will allow for this by allowing a return premium for the duration of the closure, again there is no straightforward response.

Firstly, I will address the issue of business interruption or loss of profit following closure due to the viral outbreak. Business interruption cover is designed to keep a business alive following closure due to damage by an insured peril e.g. fire or flood. Insurance companies will be prudent and will limit their exposure by being clear in their policy wordings, this pandemic was not foreseen and therefore it was not the intention of any policy to cover such catastrophic losses.

Insurance companies sell a variety of products and many of these are tailored to meet the type of business they are insuring whether that is an offi ce, a surgery or a shop. As a result the wordings in the various policy types vary. Some insrance companies offer cover for forced closure following outbreak of an infectious or notifiable disease, however there are very few policies that cover this current outbreak. Please be aware of the following;

• Some policies cover closure following outbreak of a notifiable disease on the premises or within a certain radius but diseases covered are listed and COVID-19 is not one of them
• When cover is in force, it is usually subject to a monetary inner limit i.e. there is a cap on what the insurer will pay which can be low or a limit on the period of time the insurer will pay for, maybe three months.
• Many policies do not offer any cover at all
• Many insurers will grant some form of cover but a client must specifically request that cover before the insurer will grant it
• A very small number of policies appear to cover this outbreak and these policies will be tested

Best advice? Talk to your broker or insurer and ascertain if your business interruption policy provides any sort of cover for loss of earnings while your business is closed.

The second issue is the level of cover being provided while your business is closed. Most property policies have an unoccupancy clause which restricts cover while the premises is unoccupied for a stated period of time.

Many insurers are waiving this warranty for the duration of the crisis and are offering full cover. Again, ask your broker or insurer what cover you have while the business is closed and what warranties are applicable. It is very important that you are compliant with any policy conditions so your cover remains in force.

Lastly, when your business is closed you don’t have employees working or customers entering the premises. Therefore there is a reduced liability exposure and most insurers are taking a sympathetic view of this.

You should ask your insurer if they will suspend the liability sections of your policy. They may do so and allow return premium for the period of the closure when the business reopens.

However, if you are carrying deliveries or selling on line, you will still need your employers and public/products liability insurance in place. You should only request a suspension of the cover if you are completely closed for business, but make sure cover for your liability as a property owner or
occupier remains in force.

John Bourke ACII
Dolmen Insurance Brokers Ltd
01-8022381 / 086 8146 236
[email protected]
www.dolmen-insurance.ie

This Business Support article featured in the May/June 2020 edition of The Hardware Journal.