Business insurance and coronavirus FAQs
by David Woodfield on March 30th 2020
The coronavirus crisis is understandably causing concern for business owners across the UK, particularly those wondering whether their business insurance will cover them if staff take time off work or they need to cease trading temporarily.
Here are the answers to some of the most commonly questions the Bionic business insurance team have been asked over the past week.
Does my insurance cover me for a temporary closure?
If your business insurance policy doesn’t include ‘business interruption’ cover, then it’s unlikely you’ll be covered against any financial losses caused by having to close your business temporarily.
If you do have business interruption insurance in place, then you might be covered, but it depends on what scenarios are included in the insurance policy wording.
Insurance policies differ significantly and standard business interruption insurance policies are usually dependent on damage to property and often exclude pandemics. So, it’s important you check the terms and conditions of your policy to find out if you’re covered.
Does my insurance extend to cover me for the interruptions suffered as a result of COVID-19?
Different insurers offer different extensions to cover, and we’re currently working with all our insurers to get a better understanding of the cover that may apply.
Some insurers, for instance, will only cover for a specific list of diseases. The trouble is, COVID-19 is a new disease and is unlikely to be included in any list of specified diseases. This means it’s doubtful that your business interruption insurance will provide cover in this instance.
Other insurers don’t specify a list of diseases, and instead offer cover for any ‘Notifiable Disease’. If this extension is included in your policy wording, there may potentially be cover under this section. However, some policies will still have a policy wide exclusion for epidemics and pandemics.
What is a Notifiable Disease?
A notifiable disease is ‘any disease that’s required by law to be reported to government authorities to allow it to be monitored’.
The UK Government confirmed COVID-19 is now a ‘Notifiable Disease’ as of March 5, 2020.
Are there any insurers that do cover coronavirus?
We are currently working with all our insurers to understand which policies offer cover & which one’s don’t.
But you need to bear in mind that coronavirus is just the virus that’s spreading and it’s COVID-19, which is the disease. As it’s a completely new disease, it won’t be included in any policy wording, it being classed as a ‘Notifiable Disease’ remains your best chance of being covered.
My business gets its supplies from the EU, and these suppliers are now closed, or orders cannot be fulfilled because of the coronavirus. Will business interruption insurance cover this?
Although unlikely because of the exact policy wording and conditions, this is a situation that might be covered as part of your business interruption insurance, but only if you have an extension that includes “failure of suppliers” or “unspecified suppliers”.
Not all policies include this extension, and those that do usually specify that there must be ‘Damage’ (perhaps in the form of fire, theft or flood) at the premises of the suppliers, manufacturers or processors, and does not include interruption at those premises as a result of a virus or disease.
In short, it’s unlikely you’ll be covered in this instance.
You should notify your insurer as soon as possible, regardless of whether you think you have the necessary cover in place.
If cover can be provided your insurer will be able to help you from the start of the time that you had to stop trading and your business was effectively ‘interrupted’.
Remember that this situation is constantly changing, so please do join Bionic's online chat group to discuss announcements, air concerns, share advice, ideas and much-needed support with other business owners like you.
We're also regualrly updating our blog on What every small business owner needs to know about coronavirus as well as any information on the financial help available to business owners.
If any of my employees become unwell and we are unable to trade, will my policy provide cover?
Most business insurance policies do not include this type of cover. Unless you have arranged a specialist policy. It’s unlikely this will be included as part of your policy.
If you’re unsure, check the wording on your policy documents or speak to your insurer or broker.
But regardless of whether you’re covered by your insurer, there is government help available in this instance.
The government has said that sick pay for people off sick due to coronavirus should be paid from the first day of absence (instead of the fourth day of absence) and that small business owners can reclaim two weeks’ worth of Statutory Sick Pay (SSP) to cover the costs of these absences. This refund is based on business size and will only be available to any businesses that employed fewer than 250 people on February 28, 2020.
There’s still no detail on how this money can be claimed, other than that the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible.
In the meantime, make sure you keep a record of staff absences due to coronavirus COVID-19 and ask the employee to request an isolation note.
What’s the point of my business insurance policy?
Many businesses are trying to find out if they are covered for the loss of income they are experiencing through coronavirus and the government’s orders to temporarily pause trading.
It still remains unclear as to the exact levels of cover, if any, that may apply, but many businesses are finding that their policy does not cover the specific set of circumstances we now face – a previously unknown disease that has caused their business to close.
This is causing many to question the value of their insurance policies, but we urge caution as your insurance policy will provide many other covers for a wide range of other scenarios which could still affect your business.
For instance, it’s worth checking the other elements of your policy to make sure you are protected against the ‘day to day’ risks which, may now be more likely to occur, such as theft, attempted theft, vandalism or malicious damage due to your premises being unoccupied.
It’s worth checking that you have all the necessary security measures in place to make sure you comply with the terms of your policy, which includes making sure all alarm systems are in full operation.
If the temperatures drop, pipes could burst and your business premises could be flooded, a problem which will be made be more severe if premises are not regularly checked – where possible you should check the premises once a week and check your policy for any particular instructions to ensure cover is maintained.
Also be aware of any unoccupancy rules, as many policies limit the number of days you can be away from your premises before cover is automatically restricted. Check your policy to see how many days your policy allows and, if this could cause an issue, get in touch with.
Our advice is to keep your policy in force as good quality policies will cover the usual day to day risks, some of which may now be more likely.
If you’re unsure, check the wording on your policy documents or speak to your insurer or broker. Bionic insurance customers can call us on 0800 158 5263.