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Insurance: Business Interruption

As outlined in a previous post, Covid-19: The ‘Uninsurable’ Risk, despite the UK Government announcement on 17 March, insurance companies are still not stepping in to help with Business Interruption (BI) insurance pay outs.

We are working closely with Partners for Business, Bruce Stevenson, on this. They have submitted a test claim and are liaising with RSA. I am in regular contact with Bruce Stevenson, but this will not be resolved overnight.

According to RSA, “unfortunately, in the majority of cases, Business Interruption policies will not cover losses arising from Covid-19, whether as a result of the presence of the disease on their Premises, or from the Government enforced closure of non-essential businesses on 23rd March.

  • However, if the policy includes a “Notifiable Disease extension”, then this extension may provide cover for certain losses, if the closure or restriction of their Premises is directly as a result of the discovery of Covid-19 at the Premises, rather than as a result of the more general restrictions enforced on the 23rd of March.
  • If they were not required by Government to close on 23rd March but the Premises are or have been closed by a relevant authority as a result of the discovery of Covid-19 at the Premises, they may also be able to claim for certain losses suffered.”

We will continue to put pressure on RSA and encourage the UK Government and the Financial Conduct Authority (FCA) to intervene and be a little more direct in their instruction to RSA and other insurance companies.

The FCA has announced it intends to seek legal clarity on BI insurance to resolve doubt for businesses who are facing uncertainty on their claims. The outcome of this will lead to a ‘declaratory judgement’:

 “FCA has announced it is taking an urgent legal action for court guidance as to the application of common clauses in Business Interruption policies in the current situation. The announcement also seeks to raise the bar in terms of expectations on insurers to ensure that policies they are selling to SMEs remain fit for purpose and value for money in light of the recent events.

“We have been clear that we believe in the majority of cases, business interruption insurance was not purchased to, and is unlikely to, cover the current emergency. However, there remain a number of policies where it is clear that the firm has an obligation to pay out on a policy. For these policies, it is important that claims are assessed and settled quickly.

 The full FCA announcement can be found here.

Read the New York Times.

Insurance companies have only been given until 15 May to submit their evidence.

Meanwhile, our friends at the Professional Association of Self-Caterers (PASC) are leading the charge in terms of fighting back against insurance companies that are refusing to pay out over Business Interruption Insurance in England. They are primarily fighting against the Cottagesure policy, which is underwritten by RSA. PASC intends to bring RSA to court, and consider that there is a case to answer.

They have set up a private Facebook group, Cottagesure Action, which illustrates a common purpose. There are now 235 members of this group. Do consider joining it: https://www.facebook.com/groups/209568546997457/. You can also sign up to their newsletter by emailing: Alistair Handyside chair@pascuk.co.uk.

Unfortunately, without robust intervention from the UK Government, this will be a marathon rather than a sprint. Rest assured, it is very much part of the ASSC’s lobbying activity.

Covid-19: The ‘Uninsurable’ Risk’.

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