The Association of British insurers has moved to explain the issues around the insurance coverage for businesses in the UK after the Government was criticised for not forcing pubs, clubs, theatres and restaurants to close.
Many commentators said the suggestion to avoid visiting pubs restaurants and entertainment venues left firms facing the situation of almost no customers and if they take the decisions to close without being forced to, they invalidated any insurance cover.
UK Chancellor Rishi Sunak, responded saying that the government has met with insurers to agree that it’s announcement that people should avoid such premises was sufficient enough to trigger any pandemic clause in a firm’s business interruption insurance policy.
Prime Minister Boris Johnson added: “Where companies have cover in their policies that will be enacted if their business is compelled to close we have it from the insurers they will pay based in the advices we have given. Insurers have stepped up to the plate.”
The debate has intensified scrutiny on the insurance response to the threat of Coronavirus and the ABI spoke out to say that for a vast majority of firms whether the government or authorities ordered the closure or didn’t, would make no difference to their chances of a claim.
“Irrespective of whether or not he government order the closure of business the vast majority of firms won’t have purchase dover that will enable them to claim on their insurance to compensation for their business being closed by the coronavirus,” said the ABI. “Standard business interruption cover- they type the majority of businesses purchase – does not include force closure by authorities as it is intended to respond to physical damage at the property which results in the business being unable to continue to trade.
“A small minority of typically larger firms may have purchased an extension to their cover for closure due to any infectious disease. In this instance and enforced closure could help them make the claim, but this will depend on the precise nature of the cover they have purchased, so they should check with their insurer or broker to see if they are covered.”