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Business Interruption Cover and the Coronavirus

Wed 18th Mar 20

We are receiving a large number of calls regarding the extent of cover typically provided by Insurers under their Business Interruption cover for the Covid-19 outbreak. The following is general information with the suggestion that you speak to your usual Ryan’s contact for specific information

The insurance industry would not usually intend to provide cover for business interruption losses that arise as a result of the current situation we are all facing. Insurers would consider this type of risk as being ‘fundamental’ and too large for the insurance industry to offer protection against. Fundamental risks are generally the responsibility of the Government, a good example would be losses arising from an outbreak of war.

You may have an ‘infectious diseases’ extension under the business interruption section, but the intention of this extension is to cover some of the ‘known’ serious diseases that could interrupt a low number of businesses for a short period. Examples of these type diseases would be Chickenpox, Tetanus, Mumps, Diphtheria, Rabies and the like. When it comes to new and emerging diseases such as Covid-19 then these would not normally be covered.

The Government should provide clarification on the level of support that they will be providing to business to help then continue trading through this crisis.

Business Closures

The government advised leisure businesses to close voluntarily and recommended that people stay away from pubs, restaurants and bars and called on people to avoid all non-essential contact. People have also been guided to work from home where they can. However it did not order the closure of these public spaces prompting a public backlash that firms won’t be able to claim for business interruption as it isn’t a closure order.

The Association of British Insurers (ABI) has stated that “Irrespective of whether or not the Government order closure of a business, the vast majority of firms won’t have purchased cover that will enable them to claim on their insurance to compensate for their business being closed by the Coronavirus.”

Unoccupied Premises

As some businesses may be forced to close during the corona crisis, please have regard for any security requirements and cover restrictions which may apply during any period of un-occupancy.

These will vary depending on the type of property, location and nature of the business. Please ask your usual Ryan contact for specific guidance

Useful Links

Aviva Pandemic Planning and the Coronavirus

CIPD Responding to the Coronavirus