Coronavirus: Are you insured?

The crisis surrounding coronavirus is clearly having a serious impact for many SMEs. Therefore, it is crucial that businesses check to see if any of their losses are covered by any insurance policy that they may have in place.

09 April 2020

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The crisis surrounding coronavirus is clearly having a serious impact for many SMEs. Therefore, it's crucial that businesses check to see if any of their losses are covered by any insurance policy that they may have in place.

In each individual case, the wording of the particular policy will be paramount. It will all depend on what particular cover is provided.

The starting point is likely to be business interruption insurance. This is usually coupled with cover for property damage. The difficulty that businesses are likely to face is that business interruption cover typically requires damage to insured property as the trigger for cover for losses caused by interruption to the business. It may be difficult to point to actual physical damage to property caused by the coronavirus. It is therefore unlikely that business interruption insurance will offer a solution.

What happens if a business faces claims from customers and members of the public for failing adequately to protect them from coronavirus? It is highly likely that we will see such claims in the near future. The industry sectors most likely to face claims are travel and hospitality (for example, cruise ships, package holiday operators, hotels, restaurants and airlines). A public liability policy may well cover such claims, but it will depend on the precise wording.

Similar claims may be brought by employees in these, and other, sectors. For example, employees in the health sector are also likely to bring claims if health boards have not taken steps to afford these employees adequate protection from the risks of infection. In this situation, employer’s liability insurance should provide cover for such claims.

What should businesses being doing? 

Businesses should now be taking steps to ascertain what insurance cover they have in place.  They will need carefully to consider whether the particular wording of any policies in place will give them cover for the losses that they are likely to sustain while the crisis continues. 

Balfour+Manson can offer advice on insurance coverage issues. If you need any advice, please contact Gordon Deane.

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