Business interruption insurance claims and coronavirus
Our commercial litigation team is often asked to advise on insurance contracts. The coronavirus crisis is resulting in many more disputes between businesses and their insurers. We look at one particular area of concern; coronavirus business interruption claims.
Coronavirus represents a substantial challenge to the insurance industry and it is widely reported in the press that insurers may simply not have sufficient resources to meet the large number of claims arising from the pandemic. There is a real risk that insurance companies will take a policy decision to refuse to pay out on claims or delay paying claims across the board, rather than considering the merits of individual claims and paying out where appropriate.
It is therefore imperative that you seek legal advice as early as possible to ensure your business is at the head of the queue. By doing so you will hopefully push your insurer into making a decision on your coronavirus business interruption claim.
If resistance is met then the next step is to threaten court proceedings in order to achieve payment. For a legal claim against an insurance company to be successful it is first necessary to establish that the insurance contract does actually cover the type of insurance risk suffered; subject to the terms and conditions, exclusions and exemptions of that policy. This is particularly important with coronavirus business interruption claims.
While legal assessment of coronavirus business interruption claims has to be carried out on a case by case basis, standard business interruption policies often require damage to, or loss of, insured property as the trigger for losses to be covered. That is unlikely to occur as a direct result of coronavirus. However, there may be arguments that can be raised. For instance it may be arguable that loss of use of business premises could trigger cover even where there is no physical damage to premises, although it does depend on the particular policy wording.
Some policies cover financial losses for businesses which are unable to use their premises following an occurrence of an infectious and/or contagious disease. Assuming that cover is not limited to certain named diseases or already known diseases or excludes pandemics for example or indeed some other exemption or exclusion, then such a policy could in theory cover losses caused due to business interruption arising from coronavirus.
If you require specific guidance on making coronavirus business interruption claims then please contact us on 01823 345654 or send an email to [email protected]