Business interruption insurance – am I covered for closing due to COVID -19?

As COVID-19 continues to prevent businesses from trading and shuts down entire sectors, more and more businesses are finding that they are unable to claim from their business interruption insurance policy despite years of paying premiums.

What do Business interruption insurance policies cover?

Many businesses take out an insurance policy which usually covers the building itself for physical damage such as a fire as well as other damage and theft. But these insurance policies can also extend to various other add-ons.  You probably remember only too well the Broker or Insurer looking to “sell up” and try and get you to buy some add-ons. Business interruption insurance is one such add on. It is sometimes also called loss of business cover.

Business interruption insurance usually lists a set of separate circumstances where if the building or business is closed then the policy holder can claim under the policy for loss of profit. The circumstances that are usually covered are things like a fire or flooding, i.e. where the building is damaged in such a way that the business cannot trade until works are carried out to the building and it is safe to reopen.

What is the situation with COVID-19 and business interruption insurance?’

Some policies may include cover for infectious diseases. If your policy has this wording then you may be in luck.  However if they policy has gone so far as to define those actual diseases and name them then it is unlikely to include the circumstance of COVID-19 given its recent emergence.  You may be covered for loss of profits due to COVID-19 and the closing of your business.

Some policies specifically cover SARS but it is likely that insurers will argue that although SARS and COVID-19 are both Coronaviruses they are genetically different and will seek to exclude policy coverage.

Policies may also include cover for diseases that have been made notifiable by a local authority. COVID- 19 was declared a notifiable disease in England on 5 March 2020. So if your policy includes such wording (i.e. “notifiable disease”) you may be able to claim from 5 March 2020.

However, like all insurance policies there are exclusions. Following the outbreak of SARS in the early 2000s the insurance industry started to look at exclusions. Some insurers, off the back of SARS, decided to exclude infectious diseases others offered an add-on to cover infectious diseases. But even these add-ons are unlikely to have been drafted to cover COVID-19.

Does my policy cover me?

This is the key question of course.  Each policy will turn on its own specific wording and some will have been drafted more widely than others.

If you are unsure whether your policy covers you and require assistance in relation to whether you have policy coverage then please contact us.