As your broker, we understand exactly what your business means to you and how hard you work to protect it. We know that you turn to us to provide an anchor of certainty during turbulent periods, and that the months ahead are shaping up to be a time of unprecedented challenges and uncertainty.
The global spread of Covid-19 has had such a rapid impact that we are a long way from understanding its long-term implications for businesses, and all any of us can do is attempt to weather the storm as it unfolds. A huge number of our customers have been in touch with us during recent days with questions and concerns about business insurance. One of the most frequently asked questions is how the insurance industry is responding to the pandemic, but the simple answer is that the industry’s response has not yet taken shape. At Heath Crawford we have decided to reach out to you directly because we would like to provide some clarity and deliver concrete answers as best we can at this stage.
Does my business insurance policy cover a pandemic like Covid-19?
Every business is unique, and as a result, no two business insurance policies are the same. The wording of your policy is tailored to the exact needs of your business and the circumstances in which it operates. However, although standard business insurance policies are designed to protect against a wide range of risks, these do not generally include unpredicted events which are both globally significant and have major financial implications, such as the Covid-19 pandemic.
It is rare but not unheard of for business insurance policies to cover the contamination of a workplace with an infectious ‘notifiable disease’, but these tend to be listed specifically and therefore will likely not include the newly identified Covid-19. In addition, the virus itself is of course not the immediate risk that most businesses are facing. The biggest threats posed by the Covid-19 outbreak are instead of the abstract, wide-ranging and constantly shifting sort that is not included in a typical business insurance policy.
What is business interruption insurance and how does it relate to Covid-19?
Business interruption insurance (BI) is an additional cover to standard business insurance policies. It is specifically designed to cover unpredicted events which disrupt your business, often via damage to the property. This damage can be a result of a number of named perils such as flooding, fires, lightning strikes or the failure of equipment. Some policies also include restricted access or denial of access cover which is intended for events such as the closure of an area by police due to terrorism or other material damage losses. All business insurance policies aim to mitigate the losses sustained in these types of events by covering both increased running costs and profits lost – although no BI policy is designed to guarantee continued profit.
The outbreak of Covid-19 has resulted in what can be considered the most widespread interruption of business in the UK since the Second World War, but the unfortunate fact remains that BI simply was not created with this sort of pandemic in mind. These policies are designed for a predefined set of risks and priced accordingly, and were they to cover totally unpredictable eventualities like that which we are facing, the cost of them would be considerably higher.
If my business is shut down by the government, does my business interruption insurance cover this?
The government’s instructions have, up to this point, been worded in a specific way which keeps them broadly advisory. By encouraging the public to stay indoors and self-isolate, and in doing so to cease giving custom to businesses, the government has effectively stalled the day-to-day operation of many companies without going so far as to close them down.
This makes questions around insurance and government-enforced shutdowns particularly complicated at present. Not only is it still highly possible that businesses could be shut down by the government over the coming weeks and months, but if this does happen it is still highly unusual for BI to cover interruptions of this type. Certain policies may include a ‘non-damage, denial of access’ extension which can cover instances in which a company is closed by an appropriate authority. However, not only is this rare but the wording would have to be very specific in order for the cover to apply in the circumstances we face.
What should I do now?
The team at Heath Crawford are here to support you and your business through this incredibly challenging and worrying period, however long it lasts. We understand exactly what you are experiencing, and our number one priority is to remain by your side. Our guiding principle of ‘protect what you value’ is more important today than ever, and we remain fully committed to providing all of our clients with the ongoing guidance that will continue to instil confidence in the future.
As the Covid-19 situation continues to evolve swiftly and unpredictably on a daily basis, all we can ask is that, like us, you await further information. As soon as we know more about the insurance industry’s response to the pandemic, we will update you accordingly.