Is Covid-19 interrupting your business?

Let’s look at business interruption insurance

As businesses around the world are starting to feel the effects of a slowdown, a reduction in revenue, the cancellation of events and the unavailability of staff due to the coronavirus (CONVID-19) pandemic, they are turning to their insurance policies to determine if business interruption claims can be filed to recover the losses resulting from the public health crisis.

Business interruption cover is usually provided in combination with property insurance. It is generally designed to protect against lost income following a specific incident or physical damage, which adversely affects the business. This is typically theft, fire, wind, falling objects or lightning, although recent policies have expanded the coverage to include cyber-attacks.

So, dust off your business interruption policy and read it. You might want to grab yourself a cup of coffee beforehand as business interruption policies are among the most complex and controversial types of insurance coverage, primarily because they are designed to reimburse a business for something that never happened – an estimate of the profit that the business would have earned had its operations not been disrupted.

Unsurprisingly, there’s usually a number of exclusions in business interruption policies. For example, you may see an exclusion for communicable diseases. However, depending on the policy, it might only refer to certain previous global disease events (e.g. SARs, Avian Flu, etc) and COVID-19 may not be captured.

With the full impact of the pandemic still unknown, businesses must keep the lines of communication with their insurance brokers / company, lawyers and accountants open, and plan ahead.

Get overly familiar with the wording of your business interruption policy. If you may have a claim under your policy, ensure you are accumulating the information needed to submit a claim at the appropriate time.

Questions? Give us a call.

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