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COVID-19 - Business Interruption Insurance - are you covered?

View profile for Paul Wilson
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When the All England Lawn Tennis Club announced in April that Wimbledon was cancelled this year due to public health issues resulting from the outbreak of COVID-19 it was reported that, having put in place specific pandemic insurance in its business interruption insurance policy following the SARS outbreak of 2003, at a cost of around £1.5m per annum, it would recover over £110m from insurers resulting from the cancellation of the tournament. 

Contrast this with the situation the Michelin-starred celebrity chef, Raymond Blanc, finds his Brasserie Bar Co chain facing.  Having taken out business interruption insurance and having had no choice but to close all of his restaurants, he made a claim to his insurers, Hiscox.  The claim, it has been reported, has been rejected by insurers which stated that its core policy wording did not provide cover in the present circumstances. 

So it seems that the AELTC has cover for the losses it will incur from the cancellation of Wimbledon 2020 because it wisely took out additional cover, in this case for a pandemic outbreak and at considerable cost, over and above the standard “core policy” offered by insurers. Raymond Blanc, like most business owners, would reasonably expect that “business interruption” insurance would cover the scenario businesses such as his are now facing, namely being forced to shut down because of an unforeseen pandemic. 

However, what is becoming abundantly clear is that whilst businesses such as Raymond Blanc’s took out business interruption insurance, on the reasonable expectation that if it couldn’t trade for reasons outside of their control its losses would be covered, that is in fact not the case.  Insurers, in the absence of specific policy extensions or indeed on the specific policy wording where such extensions are in place, are denying cover to business owners forced to close.

It is likely that businesses seeking to claim on a business interruption policy may experience a denial of cover from insurers.  Sadly, as most policies do not cover either forced closure from public authorities (again cover is specifically subject to the express wording of the policy, for example cover may require there to have been an outbreak at the business) or only cover specified non-notifiable diseases, then the policy will only answer to property damage related claims.

However, businesses should be aware that policy wording, and subsequently cover, differs.  Claims to insurers have to be dealt with in line with the specific wording of the policy so it follows that whilst some may be prescriptive in respect of cover, some could be more favourable. Policies vary and have different wording.  Cover under a business interruption policy will depend on its wording so have it checked if cover is denied by insurers.  This issue is likely to be significant in the very near future and legal challenges to the entitlement to cover inevitable.  Watch this space.  

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