The Coronavirus lockdown and your charity or business income – insurance implications

In March, the UK government has declared coronavirus a “notifiable disease”, something which is required by most insurance policies in order to pay-out. On 16 April, it said that the current lockdown would be extended for at least another three weeks.

From event cancellations to travel disruption and employees in isolation, there’s plenty of factors stemming from the coronavirus which could cause significant disruption to your business and its income. But what can you really expect if you need to make a claim as a result of the outbreak?

Interruptions to your charity or business activities - Updated 10 July 2020

You may have business interruption cover as part of your insurance to cover loss of income or the cost of alternative ways of operating. Depending on the wording of your policy, this may not necessarily cover you for the Covid-19 outbreak and subsequent lockdown. 

Business interruption cover is often part of property insurance policies, which cover physical loss or damage to insured property. 

Normally without physical damage from a covered section , income loss associated with people choosing not to travel and/or not to patronize a business (even if travel is restricted by a government authority), is not a valid claim under some property insurance policies.

However the industry regulator, The Financial Conduct Authority (FCA) has received a number of questions and concerns from customers where their business interruption policies do not cover Covid-19 losses. The FCA are now seeking court declarations aimed at resolving contractual uncertainty in selected BI insurance policies. 

We recommend that until the courts have resolved this issue, you should not be put off making a claim under your Business Interruption cover. If your claim is rejected based on there being no damage to premises then please be aware that once the above court proceedings are concluded, there may be an opportunity to revisit your claim dependent upon the outcome.  However, bear in mind that if the small print of your policy does not explicitly specify cover for outbreaks of disease, your claim may not be paid.

For an update on result of FCA’s Business Interruption test case, please see our latest blog post "Interruptions to your charity or business activities due to Covid-19 and the FCA Test Case". 

Further information can be found on the FCA’s website: https://www.fca.org.uk/firms/business-interruption-insurance 

If your events have to be cancelled

Payments you’ve already made

With event cancellation insurance in place, you may expect that you would be protected should you need to cancel your event due to coronavirus concerns. However, this all depends on the individual wording of your policy. When it comes to tangible risks or – in insurance terms – ‘definable’ risks, your insurance will likely have specific wording in place to define exactly what you’re covered for. Incidents occurring from definable risks such as fire and flooding are generally easier to claim on, as opposed to ‘undefinable risks’ which are more difficult to measure – such as the indirect repercussions of the coronavirus outbreak.

The wording to look out for in your policy should reference disease outbreaks, pandemics, bacterial infections, communicable diseases, viruses or similar.

Making additional payments for your events

Major events may take a long time to organise and payments for things like event hire may be made in instalments.

Before you make any further payments for future events you are organising, please check with us.  We will be able to provide you with guidance as to how your policy will respond, If your event was cancelled due to COVID-19 restrictions, then these payments may not be covered under your event policy.

Why not get in touch for a no-cost review of your existing cover? 

Our specialist team can let you know what you are and aren’t covered for and make recommendations on the steps you can make to better protect your business. 
For a chat with one of our friendly advisors, get in touch on
 

• 0345 040 7731 (for charities and not-for-profit organisations) 
• 0345 040 7732 (for businesses).