Irrespective of the chancellor’s comments on 17 March, many businesses are unlikely to be covered as most business interruption insurance policies are dependent on damage to property, which will exclude pandemics.
Where a business interruption section of insurance is in operation, it may include cover for denial of access including infectious diseases. However, cover under these extensions will nearly always be based on a specified list of diseases and has been since the SARS outbreak in 2003. These policies exclude business interruption due to new and emerging diseases, like COVID-19. The current COVID-19 outbreak is therefore not covered under a significant majority of business interruption policies.
Many businesses will be wondering if they are covered for financial losses should they have to self-isolate, if health authorities order the closure of their business because of COVID-19, or if they are entitled to compensation for reduced customer activity.
It is important to check the business interruption wording on your policy and if you think you have a valid claim, this should be lodged with your insurance company’s claims team.
Most property damage sections insure business contents including computers at the business premises only. We would recommend you check your policy to ensure items are covered away from the office if you are planning to work from home.
You can read the Government’s guidance on business insurance after the chancellor’s comments here.
Business Insurance Frequently Asked Questions
Some or all of my employees are working from home due to recent government guidance, will they be covered by my insurance policy?
If you currently purchase employer’s liability cover for your business, this will extend to cover them while they are working from home during this period.
My business and/or premises is closed or has become temporarily unoccupied. How does this impact my insurance policy?
Under normal circumstances, insurance policies will usually remain force for premises unoccupied for a period of 30 consecutive days. Where it looks likely this 30 day period will be exceeded, the policyholder would be required to inform their insurer, or they could invalidate the insurance provided by their policy.
Prior to the COVID-19 situation, provided that the insurer had been informed within 30 days, the insurance would remain valid, but it would be likely the insurer would reduce the cover level during the period of unoccupancy and possibly increase the premium.
During the current pandemic, we are seeing insurers making big efforts to support their policyholders by extending their definition of “unoccupied” or “empty” from 30 consecutive days to 60 days or longer. Provided you let us know if your building may be unoccupied for more than 30 days, we consider it is highly likely your own insurer will also be supportive. You should contact us if this applies to you. We will at this point check with your insurer if they have extended the unoccupancy period and we will then confirm this back to you.
In addition to the extending of the period of unoccupancy, we are also finding that provided we have let insurers know of a premises unoccupancy beyond 30 days, insurers are not reducing cover levels or charging an additional premium.
How can I secure my premises whilst unoccupied?
Needless to say, as soon as a building becomes unoccupied, it poses a much higher risk of damage/loss such as by water damage, arson or theft.
Many businesses will also be concerned about theft of their assets within a temporarily unoccupied building, with the current situation potentially leading to increased activity by opportunists or those who simply become desperate. Whilst insurers are likely to be supportive in providing unaltered cover levels for unoccupied buildings and your assets within during this period, this will likely be conditional upon their policyholders following some common sense risk management to protect the premises from a claim.
These may include:-
- Checking perimeter fences and gates are in good state of repair and operational
- Checking lighting and that any associated movement sensors are operational
- Ensuring that all window and door locks and any security shutters are operational
- Ensuring any CCTV is operational and maintained, including recording and any remote monitoring
- Checking your Intruder Alarm is fully operational and maintained, including offsite remote monitoring. Any reduction in Police response or keyholder availability needs to be advised to your insurer immediately
- All money to be removed from site including money in safes and deposited in the bank or bank night safe
- Where possible any high value goods are to be removed from display and securely hidden away.
- Where practical, turn off the gas, water and electricity supplies at the mains (except electricity needed to maintain any fire or intruder alarm systems, or water and heating systems for sprinklered Premises)
- You or your representative should visit once every 7 days to physically check the premises and carry out immediately any work necessary to maintain the security of the premises in all respects. Bearing in mind any restriction in travel may not always make this possible
- Remove all trade refuse and waste materials from the interior of the Premises, allowing no accumulation of refuse or waste in the adjoining yards or spaces used by you.
In the likely event you have other policy conditions applicable to your policy then these must still be adhered to in full. Examples may include an alarm condition or a minimum security condition.
We recommend you consider the above and document your security audit confirming you have done all you can to secure your premises.
Are we covered by our insurance policy if we take business contents or stock home?
The government are strongly encouraging us to work from home wherever possible. However, unless you have specifically agreed with your insurer that items temporarily removed from the business premises are insured, then you should assume they are not. Some policies may have built in Temporary Removal extensions. But where these are not present, insurers are still likely to agree they can extend cover for items temporarily removed from the premises, for example computer equipment used by office based staff who are now working from home.
However, we would advise you to let us know if you intend to move items outside the business premises so we can in turn check your specific policy coverage with your insurer. We would also advise you only move essential items away from the business premises.
Does my motor fleet insurance cover vehicle use for NHS volunteering?
We are aware that many of our clients will want to support people in their communities who are impacted by COVID-19, including the NHS Volunteer responder scheme. If you or one of your employees use their company vehicle for voluntary purposes (non-payment) to transport medicine or groceries to support others or for the activities of an NHS volunteer responder, subject to your permission that your vehicle can be used for this and any existing conditions (such as driving restrictions), your motor fleet insurance cover will not be affected.
Can we amend cover levels on our motor fleet insurance?
The first question you will need to ask yourself is whether this is possible or even advisable. If you lease a vehicle, it is highly unlikely that the lease company will allow you to insure for anything less than Comprehensive insurance level of cover. If you choose to lay up your vehicles, you should consider if there is still any risk of damage to them which would only be covered by a comprehensive insurance policy, or, if they are parked up at an employees home, is there a risk they may drive the vehicle anyway, despite being on a reduced cover basis. You will still be exposed to some risk so reducing cover levels, if possible, should never be done without a great deal of thought first.
In addition, most fleet insurers only offer comprehensive insurance cover, and it is still unclear whether they would be prepared to reduce the cover level or provide a return premium against the same if this was agreed.
Most businesses considering reduced cover levels with be doing so due to a concern about a monthly instalment payment. If this is a difficulty you may be facing, please refer to the finance provider guidance below.
We may not be able to pay the monthly instalment, is there any assistance available?
The most important advice here is do not cancel the instalment facility or allow a payment to default as this will work against you. The insurer has likely been paid and the instalment facility set up is the method you have to repay the loan. It is a separate contract from the insurance. The advice is to speak to the loan provider directly who will look to support you.
Most loans to pay the insurance by instalments are arranged with either Close Brothers Premium Finance Ltd (CBPF) or Premium Credit Ltd (PCL). The few who have insurer own instalment facilities would need to specifically refer to the insurer. We have received supportive comments from Close Brothers and PCL as follows:-
Close Brothers Premium Finance Ltd (CBPF)
“We will look at these case by case but will be considering the following options:-
- One month payment holiday
- The payment will be spread over the remaining instalments
- Where there are no instalments remaining, the last chance payment date will be extended by 30 days
- Default fee waived”
Call CBPF on 0333 321 8566
Premium Credit Ltd (PCL)
“We recognise that at this time, many customers will struggle to make payments. We are quickly reacting to the moving landscape in our approach to dealing with this. Customers can contact us at firstname.lastname@example.org or 0330 123 9717. Any requests for forbearance will be carefully considered on a case by case basis.”
We expect both CBPF and PCL to listen to your circumstances and offer suggestions how they can assist with your cash flow without incurring immediate penalty or jeopardising your insurance coverage. We as your insurance brokers are not able to discuss payment support with you – this has to be between you and your loan provider.
Please note during the current pandemic both insurers, finance providers as well as ourselves are receiving an unprecedented level of calls and messages, whilst simultaneously in some circumstances managing an reduced staff. In particular, we are finding that it is taking some time to reach the two main finance providers, however we strongly recommend that you persist with your efforts to reach them.
We will do whatever we can to assist Mitchell Charlesworth clients.