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Covid 19 & Business Insurance

Covid 19 & Business Insurance

Covid 19 & Business Insurance

I hope you’re keeping as well as can be expected in these highly unusual times. The pace at which circumstances are changing is exceptional.

 

Today, businesses across Ireland are closing for the first time in the history, and don’t know when they’ll reopen their doors. No industry is immune.

 

As I’m sure you can appreciate with all the insurers now coming to terms with the vast majority of their staff working remotely in a very short space of time, whilst having to consider the implications of a once in a lifetime event (let’s hope!) it’s proving extremely difficult to get any response given the speed at which circumstances are changing. However we are pressing on behalf of all our customers to get responses from all our insurers. Every business in the country is being affected by the current situation. We await answers on a variety of queries from clients, from direct debits, to property insurance to Business Interruption queries and Employer Liability concerns.

 

My premises has been forced to closed, am I covered?

In general the insurers have agreed cover will stay in force, but an unoccupied property presents a higher risk to insurers so steps ought to be taken to mitigate this risk

If your property does close or has closed, you should take the following steps to protect it:

 

  • Ensure the premises is locked up and alarm set if there is one
  • Check alarms and heating systems are in working order
  • Drop in and check the premises a few times a week
  • Remove all combustible waste form the premises
  • Remove any cash or valuables from the premises where this is practical
  • If we get a drop in temperature, disconnect the water to avoid burst pipes (water freezing in the pipes)

 

Does my Public Liability insurance cover me if somebody catches Covid 19 at my business?

We have had numerous queries of this nature. It’s practically impossible to determine where an individual caught the virus. With its lengthy incubation period and some cases showing little or no symptoms, proving this is similar to someone trying to claim off your business for catching the common cold or flu (these too are coronaviruses, albeit less dangerous) . It can survive on steel for up to 2 days, so who’s to say where transmission occurred. Where social distancing is practicable it must be enforced rigorously, and a strict thorough Hygiene regime needs to be enforced and visible.

 

Does my Employer Liability insurance cover me if an employee catches Covid 19 at work?

Equally here, it’s very difficult to prove the transmission origin of any coronavirus, not to mention Covid 19. Social distancing has to be enforced rigorously and a strict thorough Hygiene regime needs to be enforced and visible.

The Health & safety at work act 2005 provides that all business must:

 

As regards the place of work concerned, the employer must ensure the design, provision and maintenance of:
–    a safe, risk-free place of work,
–    safe means access to and egress from it
–    plant and machinery that are safe and without risk to health

 

To implement the safety, health and welfare measures necessary for protection of employees, as identified through risk assessments and ensuring that these measures take account of changing circumstances and the general principles of prevention specified in Schedule 3

 

An abundance of caution needs to be exercised in the workplace, Employers have a duty of care to their employees. Given the unusual times we now find ourselves in, businesses must put the health & safety of their employees first.

 

If I have to go into Self Isolation, what cover do I have as a business owner?

This would not be covered under any policy that we’re aware of.

 

I’ve been forced to close due to Covid 19. Will my business interruption cover me?

This is perhaps the most frequent query we’re receiving, understandably. Regardless of whether (or not) the Government has issued orders specifically or effectively closing a business – or an entire sector of the economy – most businesses will not have purchased any cover that might enable to make a claim to compensate them for this (COVID-19) interruption to their business.

 

A great many Underwriters will try to make the case that the COVID-19 event is illustrative of what is known as a fundamental risk. The losses arising out of such causes may be catastrophic in dimension and most Insurers will be careful to protect themselves against so wide and massive an exposure as presented by such events.

 

A small minority of firms may have purchased an extension to their business interruption insurance to provide cover for closure due to an infectious disease.

 

Nevertheless, one-size-does-not-fit-all, it is correct to say that each and every policy wording is different. Whilst there may appear to be cover for interruption caused by, for example ‘infectious disease’ this is not the same as saying, definitively, that there is the basis for a claim.

 

Common Issues

 

  1. There may not be any ‘infectious’ or ‘notifiable’ disease non-damage business interruption extension to the policy. OUTCOME: there is no basis for a claim.

 

  1. The policy in question may be based upon a specified list of diseases and these policies – by their very nature – exclude business interruption due to new and emerging diseases, such as Covid19. These policies will clearly identify the diseases that are covered, examples might be Anthrax, Leprosy, Plague, Rabies…. etc. Again, the key takeaway is that COVID-19 is so new a phenomenon that it cannot have been written into any of these SPECIFIED DISEASE OUTCOME: The current Covid-19 outbreak is therefore not covered under a significant majority of specified diseases business interruption policies.

 

  1. A policy may provide an extension under the business interruption section for ‘notifiable’ or ‘infectious’ diseases. COVID-19 is certainly a ‘notifiable’ disease per the legislation/regulations. However, the cover may be restricted to the closure of the business where there has been an OCCURRENCE of such a ‘notifiable’ disease at the PREMISES. OUTCOME: in the absence of demonstrable proof of an occurrence of an outbreak of the disease at the premises – and that the closure is because of this occurrence – the losses will not be covered.

 

  1. Like the ‘trigger’ at item 3 above, the policy cover may be somewhat wider referring (perhaps) to an outbreak of an infectious disease at the premises or within 1/10/25 miles of same. The question will be whether the closure was ‘imposed’ due to: 1) the ‘outbreak’ within the stated radius  or 2) as a result of the Government’s desire to ‘slow’ the spread of the highly contagious COVID-19 disease. OUTCOME: the pathway to cover still isn’t clear with this type of wording and we have already had one Insurer refuse to take notification of a loss on the basis that the ‘blanket government closure’ was never intended to be covered by the policy.

 

  1. In every policy, there may be diseases that are specifically EXCLUDED such as: SARS, swine flu, avian flu, AIDS etc. Each policy needs to be checked for these. We have seen a policy that excludes ‘atypical pneumonia’. COVID-19 causes atypical pneumonia. For your information, The World Health Organisation announced on 11 February 2020 that “COVID-19” would be the official name of the disease. While the disease is named COVID-19, the virus that causes it was named SARS-CoV-2. OUTCOME: Our position, where there is a SARS exclusion will likely be that this a ‘new’ SARS and hence not excluded.

 

  1. Even if/when some level of cover can be established, care needs to be taken in reading the policy to find any inner limit of liability or a limit upon the indemnity period. Many disease extensions are limited to a three-month period and few provide full cover for gross profit annualised.

 

In every case, the policyholder should react to the current crisis in the manner of a ‘prudent insured person or businesses’.

 

Currently, and until we get through this, it’s very difficult to ascertain or quantify what the loss/claim will be. So the extent of the potential loss of earnings has yet to be determined so we’re dealing with theoretical numbers, this means that there are no test cases or precedents yet so it’s very much wait and see.

 

As I’m sure you’re aware, the priority at the moment is the health and safety of everyone. As soon as we have answers we’ll communicate these to our customers.

Posted in Blog
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