The Covid-19 Pandemic has had a devastating impact on the economy. Businesses are closed, staff are on Furlough leave and for many businesses turnover is significantly reduced. Understandably, businesses are turning to their insurance policies for financial assistance.

Business Interruption Insurance – Can I Make a Claim?

Business Interruption Insurance is a specific type of insurance that provides cover for lost profits and/or additional business expenses caused by a specified insured peril. If the insured peril occurs, the policy should cover for lost profits and/or additional business expenses arising from that peril.

One peril that is commonly covered is property damage. The policy may be triggered when there is loss of or damage to property that stops a business from being able to use property or use it fully. A Business Interruption policy may cover lost profits of the business whilst the property is repaired.

A potential argument arising from the Covid-19 Pandemic are that there is loss of property as businesses are unable to use their premises and therefore cannot trade from them. Another claim may arise where an infected employee attends business premises causing the premises to close whilst it undergoes a deep clean. A further claim may arise from a denial of access to premises arising from circumstances outside of your control. The validity of any of those arguments will depend upon the specific terms of your insurance policy.

Another peril that can be added to Business Interruption Insurance is an occurrence of an infectious or notifiable disease. Insurance policies differ on this with some remaining open-ended, whilst some others specify the list of infectious or notifiable diseases that will be covered. Insurers are resisting such claims saying that Covid-19 was not in contemplation at the time that the policy was taken out. Whether or not Business Interruption arising from Covid-19 as an infectious and/or notifiable disease will be covered will depend upon the specific terms of your insurance policy.

Can I Claim Against my Broker?

If your business does not have Business Interruption Insurance, or if the Business Interruption Insurance does not include sufficient scope to include the Covid-19 pandemic, it may be possible to make a claim against your insurance broker for professional negligence.

In any claim for professional negligence you are required to show that the professional breached the duty of care they owed to you and that the breach of duty has caused financial loss. It is important to note that an insurance broker is not a default insurer where there is a gap in cover. However, if you were not advised about Business Interruption Insurance or the advice provided to you did not include protection against circumstances arising from the Covid-19 pandemic, it may be possible to bring a claim against your broker.

In considering whether to bring a claim against your broker, it will be important to establish what advice you were provided with at the time the insurance policy was taken out and what information you provided to the broker about your business. The timing of the policy may also be important. If insurance was taken out at a time that Covid-19 was known about, the advice it was reasonable for your broker to provide you with may be different to if the policy was taken out before the outbreak of Covid-19.

Where a policy was taken out before the Covid-19 outbreak, it will be necessary to consider the scope of the work your insurance broker agreed to carry out. If the broker agreed to monitor your insurance during its term to assess the validity and effectiveness of it and failed to advise you about specific cover for Business Interruption Insurance after the outbreak of Covid-19, it may be possible to bring a claim against your broker.

Alternatively, if you provided information to your broker after insurance was taken out that affected the suitability of your insurance or if the outbreak of Covid-19 affected the suitability of your insurance and your broker failed to advise you properly, it may be possible to bring a claim against your broker for financial losses suffered as a result of the broker’s negligence.

Where an insurance broker has failed to provide you with advice about Business Interruption Insurance or has not advised you correctly about adequate Business Interruption Insurance you will be required to prove that any losses your business has suffered are suffered as a result of the advice you were/were not provided with and not any other reason. As always in claims of this nature, each case will be determined on its own specific facts.

If you would like advice about whether your Business Interruption Policy will provide you with cover or whether you have a claim against your insurance broker do not hesitate to contact our Dispute Resolution Team who will be happy to assist.

Call our team on 0800 988 7756 for a FREE initial discussion. We can set up a telephone or video conference in place of a face-to-face meeting.