As non-essential businesses have been forced to cease trading indefinitely, this casts a dark shadow of uncertainty over the business’s survival. We anticipate that most, if not all businesses with the requisite cover will be seeking to make an insurance claim for business interruption.
Businesses should inform their insurers of a potential business interruption claim as soon as possible, and ideally when the interruption begins to impact upon the business’s revenue. Late notification could mean that the insurance company will deny coverage where it would ordinarily be provided.
Not all claims arising as a result of COVID-19 will be covered, which is why the policy wording must be carefully assessed. For example, some policies may only extend cover to businesses with physical damage to their premises, such as a fire or a flood, or to businesses that have stopped trading due to ‘known specified diseases’.
Insurers may draft clauses that appear to operate in favour of the policyholder, but when the time comes, they will seek to interpret their own policy wording as narrowly as possible. However, some businesses will have policies with bespoke clauses; these could potentially be interpreted widely enough to cover loss as a result of COVID-19. Bespoke clauses may specifically mention a type of cover required or the occurrence of a specific event – such as a pandemic – triggering payment under the cover.
Businesses should seek legal advice if their business interruption claim is initially refused – there is a chance that the interpretation of a bespoke clause can provide a business with the security they need during this time.
We strongly encourage all businesses to review their insurance policies to determine their coverage during this pandemic. If the policy wording is vague, coverage may still be provided based on the intentions and/or actions of the parties before entering into the policy (such as discussions that took place between the parties beforehand).
Our expert insurance litigation team can offer tailored guidance on your policy coverage and advise on potential insurance disputes that may arise.
If you would like any further information or to submit an enquiry relating to COVID-19, please don’t hesitate to contact us at 0161 826 6922 or firstname.lastname@example.org.