Everything you need to know about business insurance and coronavirus
The coronavirus pandemic and resulting lockdowns have caused businesses across the UK to change the way they operate or close their doors for the foreseeable future - all of which will have big implications for business finance and business insurance.
If you're looking towards getting your business back up and running as government measures are relaxed, check out the Bionic business blueprint for getting out of lockdown.
If you’re unsure whether your policy covers your business for a temporary closure, or whether you’ll have to amend your policy to reflect a change in the way you work, our business insurance pandemic guide should have the answers.
It's worth noting that the Supreme Court has ruled in favour of SMEs who have had business interruption insurance claims turned down because insurers claimed they weren't covered for the coronavirus pandemic.
The ruling came in response to a test case brought by the Financial Conduct Authority (FCA) and has big implications for business owners and the insurance industry. To find out more, check out our blog SMEs backed in Covid Business Insurance dispute.
Does your business insurance cover you for the coronavirus pandemic?
The coronavirus lock down has forced businesses of all sizes and across all industries into temporary closure, some because they’ve had to physically close the doors to their outlets, others because supply chains have been disrupted to such a degree that they can no longer function.
In either case, certain business interruption policies will provide what is effectively forced closure insurance, but as many business owners are finding out in the harshest way possible, the wording of the policy is crucial when making a claim.
Does your business interruption insurance include COVID-19 cover?
If your policy doesn’t include business interruption insurance, then it’s unlikely you’ll be covered against any financial losses caused by having to close your business temporarily.
But even if you’ve had the foresight to include business interruption as part of your policy, standard cover usually only protects against closure due to physical damage to your property or ones nearby that restricts access and causes you to close.
Extended business interruption insurance is available to protect against virus outbreaks and specific diseases, but as COVID-19 is a new disease it’s 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.
To find out if your business insurance covers you for the coronavirus outbreak, you’ll need to check the policy wording and look out for a list of specific diseases that are covered to see if COVID-19 is among them (remember, COVID-19 is the diseases caused by this latest strain of the coronavirus virus).
Other insurers don’t specify a list of diseases, and instead provide cover against ‘Notifiable Diseases’, which is any disease that’s required by law to be reported to government authorities to allow it to be monitored.
You might be covered in certain scenarios if this extension is included in your policy wording, as the UK government confirmed COVID-19 as a ‘Notifiable Disease’ on March 5, 2020.
Look through this section for any applicable cover relating to ‘Notifiable Disease’ (without a specified list) or contagious and/or infectious disease. You may find this under the ‘Extensions’ section of your policy wording, but some policies have a policy-wide exclusion for epidemics and pandemics, so you might still have trouble claiming.
Before you make a claim, read the wording to determine how broad your cover is and in what scenarios it applies - even where coronavirus can be covered, your cover might only kick in if certain events occur, such as:
- Your business is closed by the government or a local authority.
- The Notifiable Disease is present at your premises or within a specified distance of your premises (refer to your individual policy wording for the specifics to your policy).
For more information on this type of cover, check out our guide to business interruption insurance.
If you’re in any doubt about whether your business insurance covers you, get in touch your provider directly.
What if my supply chain is disrupted by the coronavirus pandemic?
This is a scenario that could be covered by 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 or manufacturers and doesn’t include interruption at those premises as a result of a virus or disease.
In short, it’s unlikely you’ll be covered in for a disruption to your supply chain because of coronavirus.
Is it worth having business insurance?
There will be thousands of small business closures because of coronavirus, with many owners not having the relevant cover in place to make a claim for loss of income.
Even those that took out in good faith what they believed to the necessary level of cover are having trouble claiming, which could leave you wondering what does business insurance cover exactly, and is there any point in taking it out?
Even though you may not be covered against this pandemic, it’s still advisable to have cover in place as your policy will cover against a range of other scenarios that could still affect your business.
Unfortunately, with your business premises potentially lying empty for a prolonged period, you might be more at risk from theft, attempted theft, vandalism or malicious damage, so you should make sure your policy protects against these more ‘everyday’ risks.
But this also throws up another issue you might want to proactively speak to your insurer about - policies commonly have unoccupancy rules, which will limit the number of days you can be away from your premises before cover is automatically restricted.
Where it exists, each insurer is tackling this topic differently with some extending the number of days automatically, some requesting to be informed if you have gone over the number of days and a few even waiving the condition.
Check your policy to see how many days your policy allows and contact your the Bionic team or your provider if you're concerned.
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.
Do you need business insurance when working from home?
A lot depends upon the nature of the work you do and who actually owns the equipment, and you should always check the policy wording and never assume you’re covered. This goes for any insurance policy you might have.
If you’re already running a work from home business and have a dedicated home office insurance policy, you should be covered under the terms of your agreement.
If you’re a sole trader that usually operates from home, your existing cover should also be enough if you’re still effectively operating as usual during the lockdown.
But if you’ve moved any extra equipment into the home to do your job remotely during the lockdown, even if you usually operate from home, you should notify your insurer and adjust your cover as necessary.
Home insurance generally only covers items that you own, so if you’ve shipped any work equipment into your house it’s unlikely this will be covered by your existing home insurance policy. If this is the case, you’ll need to speak to your provider and possibly arrange work from home insurance or a home business insurance policy.
If your business or the company you work for owns the equipment, you should also check whether its covered for use away from the workplace under the terms of any corporate insurance policy.
Even if you own the equipment you’re using for work, you should check that its replacement value is covered under the amount your policy will pay out for a single item. If it isn’t, you might need to increase your single item limit.
In any case, you should let your home insurance provider know that you’re now working from home, as this could affect the terms of your cover.
If you’re now storing any stock at home as your business premises will be empty, this will affect the terms of your stock insurance policy and you should notify your insurer about the change.
If you’re unsure whether your public liability insurance and employer’s liability policies are affected by the coronavirus lockdown - are you covered for having business visitors to your home, for instance - remember that social distancing rules mean that no one should be in your home that doesn’t usually live there.
Will you need extra insurance if you start up a delivery business?
A number of businesses have had to change the way they work to deal with the coronavirus pandemic, most notably restaurants and cafes which have become delivery-only businesses.
If you change the way you do business in any way, whether you shift from an office-based workforce to a home-based one, or if your eat-in restaurant pivots to a food delivery business, it’s important to let your insurer know as soon as possible and take out any extra cover where necessary.
And bear in mind that if you’re starting up a delivery service from your cafe, restaurant or pub, your delivery drivers won’t be covered by their standard car or bike insurance policy, which will cover private use of the vehicle rather than use for business.
If you’re a licensed premises offering an alcohol delivery service, you should check that your alcohol premises licence includes ‘off-sales’ - as the alcohol will be consumed away from your premises - and take into account you’ll be responsible for age verification.
If you are transporting a large number/high value goods you may need to consider additional cover for your business insurance regarding goods in transit. It may be worthwhile checking your insurance policy to see if you have cover for ‘collection and/or delivery already on your policy.
To find out more about business insurance, coronavirus and small business closures, check out our business insurance coronavirus FAQs page.
If you worried about paying your energy bills while unable to work during the lockdown, or about inflated energy bills when working from home, our guide to business energy help for coronavirus lockdown is worth reading.