Good insurance is the bedrock of good business, but only if the right policies are in place.
Laura Dawson, communications adviser at the Association of British Insurers, says insurers are well aware of the “uncertain and difficult time for families and businesses”. She continues: “Insurers’ main priority is to make sure customers can continue to have their claims paid in this challenging environment.”
Naturally, a key worry for firms is whether they are covered for coronavirus-related risks; it’s painful to report that those with ‘standard’ policies will only be covered for ‘standard’ risks which is unlikely to cover coronavirus. Even so, Dawson says “that those who are unsure what their policy covers should check with their insurer”.
Sadly, a good number of firms claiming for business interruption are finding that notifiable disease is not a covered peril. This is because in terms of business interruption cover, most policies cover only fire, flood or storm, and sometimes the breakdown of essential equipment. Cover could also involve firms being unable to access their premises.
The problem, as Dawson explains, is that “businesses may have chosen to purchase cover that specifically provides for business interruption arising from ‘notifiable diseases’… but they are usually named”. By definition, coronavirus is so new, it’s unlikely to be named in any policy.
The main hope for policyholders, says Dawson, is to examine the terms if the business has purchased a ‘non-damage, denial of access’ extension to a business interruption policy: “If a business is forced to close or is told to close by an appropriate authority or is cordoned off, this could trigger a claim even if the infectious disease cover is unspecified or if it includes Covid-19.”
For the purposes of continuity, some businesses may consider having certain staff working from home. While Dawson says that cover will be provided by standard home insurance policies, assuming that the work is clerical in nature, that’s not always the case: “If individuals are working from home and receiving visitors to their home on business matters, there may be some restrictions in cover such as loss of money and theft being excluded unless there is evidence of forcible and violent entry to the property.” And to this, she says business equipment, such as a laptop, is likely to be uncovered. “We would expect the employer to be liable for ensuring their equipment is insured away from the office.”
On travel, Dawson reassures that trips already booked under existing policies remain unaffected, subject to government advice. Indeed, all overseas travel has effectively been banned until early May and as Dawson says: “Anyone travelling to a country or region against government advice risks invalidating their travel insurance.”
It’s comforting that, as she adds, “travel insurance may cover some out-of-pocket losses and expedite return to the UK if that’s the advice and if you are unable to get assistance from any other source”. Further, if policy holders are quarantined overseas, they should be covered too.
A policy may also cover non-refundable cancellation costs, but it won’t cover ‘disinclination to travel’ where the government has advised against travel.
Income and illness are not welcome bedfellows. Some may be fortunate if they have an income protection policy – a sick pay-style product. The problem is that most policies have a waiting time of between three to 12 months before paying out.
However, Dawson advises that it can be between one to four weeks for short-term policies, and there are some short-term policies that provide cover from day one of absence. She adds that invariably self-isolation is not covered. Again, the key is to check the policy terms.
Lastly, some firms will have trade credit insurance that covers loss if customers pay late or don’t pay at all. While the cover is still available, “it won’t,” as Dawson says, “cover loss of production volume or the insolvency of a supplier, only the failure of a customer to pay for purchased goods”.
It’s true – there is much doom and gloom around, but sight shouldn’t be lost of the fact that the sky hasn’t fallen, the world hasn’t ended, and society will surely get through the coronavirus outbreak. But it’s going to take – and this is an understatement – some managing and time. Keep calm and try to carry on.
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