Last Updated: 9th March 2020
The recent outbreak of 2019 Novel Coronavirus has understandably, as it’s spread from its origination in Wuhan City in the Hubei Province of China, raised concerns and questions around how insurance policies will respond to claims – primarily in terms of commercial losses linked to the virus.
The consequences for insurance arise primarily under business insurance policies, and, more specifically, under the business interruption element of cover. Whilst in Crawford’s white paper (The Insurance Impacts of 2019 Novel Coronavirus, 2020), they suggest that “successful claims under business interruption coverage for infection are not common”, there are some exceptions.
Business interruption is a complicated area of insurance but essentially, it’s aim is to “put policyholders back in the position they would have been if a claim hadn’t happened.”
Generally, for a business interruption claim to be accepted, there must be some element of material damage, i.e. a trigger of physical loss or damage caused by an insured peril. Diseases and viruses are not classed as an insured peril. Contingent extensions, such as denial of access to a premise due to damage in the vicinity or a power outage meaning operations stop, also need an insured peril to validate the cover. This world of contingent business interruption is a little more complex as it’s not always clear what the trigger is or how it’s impacted the business.
In the case of Coronavirus, a trigger for contingent business interruption could be what is termed a ‘notifiable disease coverage’.
On 4th March 2020, it was announced that the government will register Covid-19 as a notifiable disease. The Department of Health and Social Care said that this was to “mitigate the impact on businesses” and “help companies seek compensation through their insurance policies in the event of any cancellations they may have to make as a result of the spread of the virus.”
It does however remain a complex area of insurance and it is very much down to the individual policy wording as to whether you would be likely to have a successful claim in the event your business is impacted by the virus. It is also worth noting that losses due to Coronavirus will only be covered from the time the virus becomes notifiable – as the virus only becomes an insured peril at the time of it being registered as such.
However, the Association of British Insurers have said that most business insurance policies are still unlikely to cover losses, with many policies only providing cover if the virus is found on-site.
Update (9th March): Now that the government have registered 2019-nCOV as a notifiable disease, insurers have started to come forward to announce their stance on cover for the virus; you can read Insurance Age’s article on this, here.
Individual policies vary widely, if you are wondering whether you’re covered for interruption caused by Coronavirus, you should check your policy wording or speak to your Account Executive.
You can contact them directly or contact them via our team numbers, below.
Commercial: 01653 609151
Care & Social Welfare: 01653 600477
Rural: 01653 609152
The latest updates and information on the development of 2019-nCOV from Government can be found here: https://www.gov.uk/guidance/coronavirus-covid-19-information-for-the-public.
NHS information on the disease and how to protect yourself can be found here: https://www.nhs.uk/conditions/coronavirus-covid-19/.
References & Sources:
https://www.crawco.co.uk/resources/the-insurance-impacts-of-the-2019-novel-coronavirus
https://www.agcs.allianz.com/news-and-insights/expert-risk-articles/coronavirus-bi.html
