If you’re a business owner who is worried about keeping your business running, you may have two sources of comfort. The government is putting together a range of measures to help – and your business insurance.
If you have opted for Business Interruption as part of your business cover, you may think you have a lifeline to cling to – but the sad fact is that things might not be quite that simple.
Some businesses are still able to function with staff working from home, but there are many others who do not have that luxury. Pubs and restaurants and hairdressers, ‘nonessential’ shops and those that rely on staff being on-site to work with equipment all face closure.
It means losses are inevitable.
But what about those who have business interruption cover as part of their policy?
What is business interruption cover?
You may have cover against fire in your business insurance. If your premises burn down, your stock and your premises will be covered and replaced by the policy.
But the loss of business, in the months when your premises are being rebuilt and restocked will not be.
You could be thousands of pounds out of pocket, because even though you have cover for the things your business owns, you don’t have cover for the business itself, the thing that actually earns you money.
Business interruption cover is designed to compensate you for loss of revenue.
It includes what’s known in the industry as a material damage proviso. This means that it works following a claim made against your building or contents insurance, and covers financial losses that are a direct consequence of the insured event – such as loss of revenue because you cannot open.
In the current crisis, it might provide you with a financial lifeline if your business is forced to close – whether because you are closed by government decree, by the fact that customers are not coming in, or because of problems with your supply chain.
But you may not have the cover you need.
The Association of British Insurers has warned that most businesses opt for the basic cover, with standard commercial insurance policies which reflect day to day risks such as damage to stock and premises caused by fire, flood, theft and accidents to employees. You simply may not have Business Interruption (or BI) cover.
What’s more – even if you think that you have the cover you need – it may not actually pay out.
Why won’t your insurer pay?
The insurance industry will take the view that something that it is not specifically mentioned in your cover is not insured. No-one could predict the coronavirus crisis, and so there may be no provision for cover against it.
But all is not lost. Read your policy closely. Some policies may have a Notifiable or Communicable Disease extension. These cover notifiable disease, and prevention of access due to the order of a competent authority.
These may extend your Business Interruption cover so that, if you have to shut your business or there is a communicable disease at your premises, you may be covered for loss of revenue.
There could be grounds for a claim. The Government registered COVID-19 as a notifiable disease in England on 5 March,: The Department of Health and Social Care had stated that “this will help companies seek compensation through their insurance policies in the event of any cancellations they may have to make as a result of the spread of the virus”.
Getting some help
Dealing with a loss adjuster can be a difficult task. If you believe you may have cover and would like an independent expert to look at your policy, call us at Continuum.
We want to use our expertise to help you make the most of your finances – and during the current climate, your needs may be greater than ever – particularly if you have a business to run.
At Continuum we are still working to provide financial advice and support – and we can use the latest facilities, such as video conferencing, to deliver it.
To find out more about business insurance, and with any other financial questions – whether or not coronavirus is involved – please call us.
The information contained in this article is based on the opinion of Continuum and does not constitute a recommendation to suitable insurance / protection strategy, and furthermore does not imply that having specific types of cover will meet individual insurers underwriting criterion. You should refer to your insurer’s policy documentation for full terms and conditions.