COVID-19 and Cover Under Insurance Policies
Most Business Interruption cover is based on a specified list of diseases and has been since the SARS outbreak in 2003. These policies exclude business interruption due to new and emerging diseases, like COVID-19. Most policy wordings clearly identify the diseases that cover is offered for and, in addition, highlights that new and emerging diseases like COVID-19 are not covered.
The current COVID-19 outbreak is therefore not covered under a significant majority of business interruption policies.
Most business interruption policies traditionally focus on physical events such as a fire at a premises. Although contingent business interruption extensions for a range of non-damage scenarios are available, such covers typically have much lower limits, shorter indemnity periods and are not guaranteed to respond to novel causes of loss such as COVD-19.
We are aware of the comments made in recent government press conference suggesting the recent action now triggers possible insurance claims. It must however be pointed out that this is only applicable to that small minority of policies which already provided some notifiable diseases cover with a wording wide enough to include COVID-19. Even in those cases we will still need to refer the individual circumstances of a claim to the insurers to ensure cover applies.
Employers and Public Liability
Liability cover provides protection for the policyholder against their legal liabilities to their employees or the public. This includes property damage and Bodily Injury; Bodily injury includes Illness (including resulting death). ‘Illness’ is not defined so could include legal liabilities incurred from COVID-19 in a situation where the insured has breached their duty of care.
For a breach of duty of care to be considered, the insured would need to be in contravention of any government guidelines or advice regarding safety at work or travel.
- By sending an employee to an area affected where the FCO have advised against all but essential travel
- Not providing essential equipment or guidelines for adequate sanitation
- By making an employee come to work after they have travelled in an affected area resulting in others becoming exposed to the virus (either employees or the public).
To help avoiding scenarios like these, you could consider establishing whether you have an up to date risk assessment and updated health and safety guidelines that include COVID-19, as well as an up to date business continuity plan. If in place, this should also be reviewed regularly as both the situation and government advice continues to evolve rapidly.
If you currently have a standalone travel policy or an add on cover, and are due to travel to areas where there is a Foreign and Commonwealth Office (FCO) advisory notice in place (no travel / none but essential travel) and wish to cancel your trip, most insurers will cover this.
You would also be covered under policies if you were to contract COVID-19 whilst on holiday or in the UK prior to travel (which was booked before they were aware of the infection).
In addition to this, you would also be covered if quarantined by authorities whilst on holiday (whether you have contracted COVID-19 or not).
If, however, you bought your policy after the FCO advised against travel to your destination, you would not be covered for cancellation/abandonment under these circumstances.
We recommend that you contact us to review your policy wording for full details of cover and to look at your individual circumstances if you have travel plans booked.
Management Liability cover is provided in the event a business Director commits a “Wrongful Act”. For this to be considered, you would have to show negligence in your actions that leads to a detriment suffered by either a third party or an employee.
Wrongful acts are split between those that cover the general duties and those for employment.
The core cover is for Directors & Officers (general and employment matters), with optional entity covers Corporate Legal Liability (general matters should the claim be brought against them and not the directors) and optional Employment Practices Liability (employment matters).
For general duties, the definition of “Wrongful Act” includes any breach of duty or negligent act, error or omission. COVID-19 related issues could be included under this cover.
For employment “Wrongful Acts”, insurance coverage for “failure to adopt adequate workplace or employment policies and procedures” could lead to COVID-19 related issues being included under this cover.
This would automatically be covered under the core D&O cover and you would also be covered by the optional Employment Practices Liability section if selected.
If you have a query then please contact us directly and we can address your specific concerns and individual circumstances.
Some insurers are now not offering new inspection policies, although they are offering renewals as normal. Allianz Engineering have suspended trading of all new business inspection policies until 30th April.
Working from Home
If you or your team are planning to work from home during Covid-19 we need to make sure that if you are taking equipment away from your own premises, they are covered should a loss occur.
Allianz’s office policy for example provides cover for:
Office Contents whilst temporarily removed to, and whilst in transit between, anywhere within Great Britain, Northern Ireland, Isle of Man or the Channel Islands excluding:
- a) any amount in excess of 20% of the Sum Insured for Office Contents shown in the Schedule
- b) any amount in excess of £5,000 any one article
- c) theft from any unattended vehicle.
So the policy will potentially automatically provide cover but we would ask that you notify us as each insurers policy/limits/cover will be different.
As ever, our best advice to our clients is to act as a prudent uninsured – taking the necessary steps to protect your organisation and its people – then engage with us to review areas of recoverability under your policies.
Please contact your usual Relationship Manager or Account Executive, or call us on 01494 450 011 if you have any concerns.