What is Business Interruption Insurance?
Business Interruption Insurance is a type of cover usually contained within a commercial insurance policy. It essentially covers the business from loss of income following some form of disaster. In a lot of cases the disaster that triggers cover is usually physical damage to property or premises. It is however possible to obtain business interruption cover that responds to loss arising from other events such as:
- Notifiable infectious diseases such as the Coronavirus, Covid-19;
- Denial of access to business premises;
- Contingent business interruption (i.e. issues caused by third parties in the supply chain); and
- Acts of a public body (which may interrelate with denial of access cover).
Whether you are covered under your Business Interruption Cover for Coronavirus, related losses will very much depend on the specific wording and definitions in your policy. As with any insurance claim, it is important to formally notify your insurer of a claim (in the correct manner in accordance with the policy) as soon as possible. Failure to do so may mean that cover is not provided and/or actions you have taken prior to notification have either invalidated or reduced cover.
Please also note that the various types of cover listed above may be what is known as ‘extensions’ to your policy. That means that they are not normally included and would have been added as specific extras at your request.
What if I don’t have Business Interruption Insurance?
For many businesses, the process of taking out/renewing your commercial insurance policies is dealt with by an insurance broker. This may, for example, involve a somewhat longwinded process where your broker sits down with you and (in the case of a renewal) asks you numerous questions such as what has changed in terms of turnover, transportation, storage, premises, number of employees etc. This will invariably result in a proposal comprised of a large volume of paperwork containing detailed and technical wording. It is probably fair to say that in most cases a business will not be 100% clear on what their policy actually covers and they will obtain cover/renew on a like for like or price basis.
What if my broker didn’t mention Business Interruption Insurance?
If your broker failed to mention Business Interruption Insurance (or the relevant extension) they may have been negligent. Professional negligence is a complex area of law and much will depend on the individual circumstances. It is important to seek legal advice as soon as possible.
Insurance cover for Legal Expenses
Whilst you might not have Business Interruption cover, you might have what’s known as Legal Expenses cover contained within your commercial insurance policy. If so, this could help you to fund any potential claims. It might also indemnify you against an adverse costs order if your claim is unsuccessful. Again, prompt notification to your insurer is recommended and if you do have cover your insurer will need to be satisfied that your claim has sufficient prospects of success. In the context of legal expenses insurance cover this normally means prospects of 51% or more. There may also be other potential funding solutions available, such as a “no win, no fee” agreement.
For further information on how to deal with matters relating to the Coronavirus outbreak, please visit our Covid-19 Insights Hub.
