4 min read
27 March 2020Coronavirus has touched almost every sector – from sole traders to larger businesses. Here, we explain what impact it has on business insurance.
27 March 2020On 20 March, the UK government announced a compulsory closure of all cafes, bars, pubs and restaurants. On 23 March, all non-essential shops were closed. This presents unprecedented challenges for small businesses as many have to adjust or halt their business activity for at least 3 weeks.
During this time of uncertainty, it’s understandably important for small businesses to access the funding they need to keep in good standing for the current economic situation, or for when they can reopen to the public. Claims on business insurance is one source of finance you might be eligible for to help support your business during this period.
Successful COVID-19-related claims will depend on the details outlined in your insurance policy, and the claim itself. When COVID-19 was added to the government’s list of notifiable diseases on 5 March, this did not automatically change business insurance policy coverage.
Below we have collated the most common policies that you might be able to claim on.
Please be aware that COVID-19-related claims on insurance will vary by individual case, depending on your insurer, your policy details and the claim itself. Most insurers will specify the circumstances you can make a reasonable claim concerning COVID-19. To be sure of your eligibility for a claim, read your policy details and make an enquiry to your insurance provider.
Also known as Loss of Profit insurance, this protects your business income if there has been damage to equipment or premises which prevent your business from operating. Typical cover specifies standard risk incidents such as flooding, a fire, storm or other physical damage. This is unlikely to cover business disruptions caused by government response to global pandemics like COVID-19.
Your business might be covered if you have a non-damage business interruption extension on your policy, such as:
This covers your business against claims made by any member of the public, or clients who have suffered an injury or damage (including their property), in connection to your business. Depending on the individual case, you might be able to make a claim relating to COVID-19 if it can be proven that a third party has been impacted by COVID-19 as a direct consequence of negligence by you or your business.
This protects your business if a current or former employee sues for illness or injury caused by their work including while travelling on work. Depending on the individual case, you might be able to make a claim if it can be proven that your employee was impacted by COVID-19 as a direct consequence of avoidable actions taken by you or your business.
It is important to note that even if you have the business interruption insurance extensions or policies outlined above, you might not be eligible to claim. This is because:
Insurance provider Macbeth suggests that the most likely successful insurance claims to succeed would be those that:
You might also be considering adding extensions to your existing insurance to cover for COVID-19 related incidents. Business insurance provider Bionic suggests that most insurance companies are excluding COVID-19 in policy cover going forward, and any related claims are unlikely to be successful since COVID-19 is no longer an ‘unforeseeable event’ to be covered by insurance.
Step 1 - Make sure to read over your insurance policy contract in detail. You might also want to check if a claim will involve a payment of an excess, which will be detailed in your documents.
Step 2 - Once you’ve reviewed your insurance policy and believe you’re eligible to make a COVID-19 related claim, get any necessary supporting documents ready for a claims handler to review. This may include any documents to prove your earnings, medical documentation or photographs as evidence of damage to business.
Step 3 - Contact your insurance company and follow their normal claims procedures. This typically includes a form that you can fill out online, by email or over the phone. Once all the details are received and your claim is reviewed, a settlement will be presented for you to receive.
Your business is still liable to standard risks such as accidents or thefts, even if you aren’t currently operating. So it’s still worth ensuring your business insurance is up to date and covers you against these ‘everyday’ risks during this period of closure. If in doubt, get in contact with your insurance provider or broker.
If your insurance policy doesn’t cover for interruption caused by COVID-19, we’ve listed other types of financial help for small businesses including details of government support packages for businesses.
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Kelly is a marketing analyst at iwoca with a focus on direct marketing, CRM and analytics. She previously worked with American Express and Amnesty International.
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