The Association of British Insurers warns that few businesses forced to shut down by coronavirus will be able to claim against their interruption policy
The vast majority of companies in the UK won’t be able to claim on their business interruption insurance policy, even if they’re forcibly shut down by the government to control the spread of COVID-19.
This is according to the latest guidance from the Association of British Insurers (ABI), which said although a minority of larger firms may have additional coverage for infectious diseases — the rest will have a standard level that pays out if trade is interrupted by physical property damage.
The clarification from the ABI comes after it released advice to clear up confusion caused by a government announcement that coronavirus was designated a “notifiable disease” to help businesses claim for business interruption caused by COVID-19.
The association’s statement said: “Irrespective of whether or not the government orders closure of a business, the vast majority of firms won’t have purchased cover that will enable them to claim on their insurance to compensate for their business being closed by coronavirus.
“Standard business interruption cover— the type the majority of businesses purchase — does not include forced closure by authorities as it is intended to respond to physical damage at the property which results in the business being unable to continue trade.
“A small minority of typically larger firms might have purchased an extension to their cover for closure due to any infectious disease.
“In this instance, an enforced closure could help them make the claim, but this will depend on the precise nature of the cover they have purchased.”
The ABI didn’t give further guidance on what that “precise nature” might be, but once the government announced the designation of COVID-19 as a notifiable disease, it responded that this type of cover is “not commonly included” in business interruption policies.
Insurance companies themselves were also quick to point out that where infectious diseases are covered under an interruption policy, it typically includes a list of those it will cover, and that businesses will not be insured beyond that.
The ABI urged businesses concerned about their interruption coverage to check the terms of their policy with their broker or insurer.