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COVID-19 – Practical pointers in relation  to Business Interruption Insurance - 28th April 2020 - Click for larger version COVID-19 – Practical pointers in relation to Business Interruption Insurance - 28th April 2020

What is Business Interruption Insurance (“BII”)?
BII is designed to cover businesses against losses of profit in the event of certain circumstances.

Primarily, circumstances involving property damage, leading to losses of profit – eg. a fire or flood at premises leading to interruption of operations.

Those types of circumstances would not of course be of any relevance to CV-19.

However, some policies extend cover to loss of profits resulting from various other sorts of circumstances, which might be relevant.

If I have BII, where would I find it?

Business Interuption Insurance is not contained in a stand-alone policy.

It is found in general, commercial policies – often called commercial combined policies, which bundle together various insurance covers relevant to businesses.

You might have BII and not even realise it.

If you have it, you will have a section in your policy titled “Business Interruption Insurance”.

Which sections of BII might be relevant to Covid- 19?

If a business is suffering disruption in connection with CV-19 then broadly speaking there will be two causes of that disruption –

Firstly, the outbreak of CV-19 itself, and, secondly, the lockdown which has been imposed by the government as a result of that outbreak, perhaps forcing you to close down your business premises.

The distinction between these two causes of disruption can be seen if you compare the UK to Sweden. Similar to ourselves, Sweden is suffering from outbreak of CV-19, but has not imposed a lockdown, so businesses in Sweden will not be subject to the same extent of disruption.

So, the parts of BII policies that will most likely be relevant to CV-19 are sections which, in effect, cover you for disruption to your business caused by:-

- “infectious” or “notifiable” disease; or

- “denial of access” to your premises in connection with amongst other things actions of the government or other authorities.

We would stress that we would not expect all BII polices to include these types of cover and some policies that generally, as a starting point, include these types of cover will include specific exclusions that eliminate CV-19 and its global outbreak from the scope of the insurance cover.

I want to investigate whether I have BII and my position. What should I do?

As a starting point you should contact your insurance broker.
Your broker will be best placed to give you copies of your up to date policies and to provide you with initial advices. Your broker will, if appropriate, ultimately be able to help you with the submission of a claim to your insurers.

We would, however, say that there may well be value in getting further opinion, in terms of the scope of your policy and CV-19.

BII policies are not standardised - they vary from insurer to insurer – and they are not easy to read and really understand. Key parts of these policies are open to interpretation. The current circumstances, which have to be applied to the any policy, are also of course unprecedented.

At the end of the day, two pairs of eyes are better than one pair.

If I have been advised that I have a reasonable claim for CV-19 / lockdown related losses, but my insurer rejects the claim, is there anything further that I can do?

In normal times, if an insurer rejected your claim and you were not prepared to accept that rejection, then you would probably follow the insurer’s internal complaints procedure and if still no satisfactory resolution you would then make a complaint to the Financial Ombudsman.

Those options will still be open for you.

However, complaints procedures of insurers and the Ombudsman are even in more typical times very slow. We most recently experienced a complaint taking two years to be finally dealt with by the ombudsman.

In current circumstances, the reality is that some of your businesses might not have the time to wait for complaints procedures to run their course.

We also do not consider that the Ombudsman’s complaints procedure is the best forum. The real issue to be resolved will not be a service complaint.

The real issue will b whether or not an objective interpretation of a policy would include or exclude a CV-19 claim. BII policies are contracts, and like any other contract, are subject to the rules of interpretation that have been set out by the Courts. The Courts themselves are best placed to apply those rules of interpretation.

If you have a good claim, Court action might be the only route that can feasibly deliver you a result that is going to make the difference.

If my business cannot in these challenging times fund and take the risk of a Court action, is that the end of the road? Are there are any options, to assist with funding and mitigate the financial risk?

Court action does come at a cost and with exposure to risk – success can never be guaranteed and in the event of not being successful a party will normally be left with not just their own costs but also the other sides.

There are, however, options to help with funding and mitigation of the economic risk – litigation funders.

Litigations funders are just as they sound – parties who will provide funding to facilitate a court action. Generally speaking, they will, if they agree to assist, provide funds to pay your own legal costs and will take on the risk of the other side’s cost in the event of your action being unsuccessful.

We have spoken to a funder who is keen to look CV-19 related insurance claims.

If you have a good claim, there may well be funding out there for you.

If you wish to discuss any of the above in further detail then you can contact Michael Hankinson at

Michael will be delighted to arrange a time to have a call with you.

Last updated: 11.05am, Wednesday 29th April 2020

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