Smooth Law issue advice on business interruption policy

Thu, November 12th, 2020

How can you claim against your Business Interruption policy if you have been...

How can you claim against your Business Interruption policy if you have been affected by COVID-19?

Many Liverpool businesses have been affected by closures due to COVID-19. Find out the steps you can take to see if you can claim on your business interruption insurance policy.

The business interruption scandal has seen many businesses turned down for compensation by their insurer when they had valid claims. This short guide will explain your steps if you believe you are entitled to a pay-out that your insurer has refused.

There will, of course, be some insurer specific details that we may not know in your case, and there may be some fine print within your policy which may affect things. Nevertheless, this is a good starting point to see if you can progress with a potential claim.

To use this guide, you will need both your Policy Schedule and Policy Wording to hand. This will help you cross-check to the information below. Hopefully, by the end of this article you should know if you have a viable case which can be progressed with solicitors, and if you don’t, feel free to get in touch with Smooth Commercial Law for advice relating to Business Interruption insurance claims.

Step One – Find out if you have Business Interruption Insurance

You should have a copy of your Policy Schedule, either printed out or in an email/PDF. If you cannot find it, simply ask your insurer for a copy of it.

Business Interruption is not always included within business insurance policies – it can often be an add-on if you do not get comprehensive cover. The add-on can normally carry a premium, so many businesses choose against getting the cover, particularly if you do not have a physical location.

Locating the Business Interruption part of your insurance policy, if you have it, should be relatively simple. It will be clearly detailed on the Policy Schedule, and can usually be found in the Contents of the policy. If you cannot find it here, you may simply not have the cover.

Step Two – Find out what type of Business Interruption Insurance you have

There are a number of different types of cover you might have purchased from your insurer. Generally, they will be one of the two basic levels below, or a combination of both:

  1. To compensate a business for a decrease in turnover caused by certain insured events, whether through a loss of revenue or a reduction in profit
  2. To pay additional running costs and expenses as a result of the insured events

You will then need to check the relevant extensions in the wording. These could be present in the Policy Schedule or the Policy Wording – some insurers operate in different ways.

Business Interruption Insurance can usually include a few extensions to the basic protection. For you to have any cover throughout the COVID-19 pandemic, you need to have at least one of the following extensions:

  1. Public Authorities – This extension is designed to be used where a business premises cannot be used due to an incident which forces the premises to close. Examples when this extension can used might be a food poisoning outbreak on the premises, for example.
  2. Non-Damage Denial of Access – This extension covers your business where a local authority prevents or hinders access to the premises following an incident within the immediate area. Examples when this extension is used can be a gas leak causing the closure of surrounding streets.

If you and your business have neither of these extensions within your Business Interruption Policy, it is likely you will not be able claim against your insurer.

Step Three – Find out if Diseases are included within your policy

We are now into the nitty gritty of the Policy Wording, so you will need to be reading the small print. We next need to determine whether your Business Interruption cover includes the impact of diseases more specifically.
This will be displayed as “Notifiable Diseases” within the Public Authorities extension. The wording here is important. It needs to explicitly state that the cover is included for “Notifiable Diseases” which, if they were to occur, you would be obliged to tell the local authority. COVID-19 has been confirmed as this sort of disease.It may also be referred to as “Human Contagious Diseases”.

For the Non-Damage Denial of Access extension, diseases are not usually referred to. For this reason, if you have this extension, you will need to double-check it would apply to COVID-19 by seeing if there is an exclusion (rather than inclusion) to all Notifiable Diseases. This also includes any exclusions for Pandemics.

Having said this, there may be exclusions within this extension that don’t touch COVID-19 at all. For example, there may be an exclusion within the extension that covers AIDs, but has no mention of COVID-19. If this was the case, you may still have a claim for compensation.

Step Four – Find out if COVID-19 is specifically excluded

Having passed the first three steps, we are now getting very specific. We need to check within the Policy Wording if any specific diseases are named. Some policies will include a specific definition for Notifiable Diseases. In this case, you will need to check the wording carefully.

Double-check if there are any specified diseases or any excluded diseases. Despite it being a new disease, COVID-19 might be considered one of the diseases listed, depending on the wording.

Step Five – Get in touch

As you can see, claiming business interruption compensation through a business insurance policy can be a little tricky. While it could also be the only hope of survival for many Liverpool business owners, the wording of the insurance policies is often very complex and sometimes unique to each business.

If you believe you are entitled to business interruption compensation and your insurer isn’t paying out, our expert solicitors are able to go through your policy carefully to determine whether you may be able to claim.

If we believe you are eligible and your insurer disagrees, our team can calculate your potential losses and challenge the insurer for you. Our expertise with working with insurance companies, the FCA and the FSCS means that we can present your claim in a way that is dealt with promptly and efficiently.

Our legal team come from a financial services and compliance background. We are regulated and authorised by the Solicitors Regulation.

If you would like to speak to one of our Business Interruption Claim Solicitors, you can do by calling 0800 046 9976, or by completing an enquiry form.

You can also contact Smooth Commercial Law Directors via email:
Scott Birchall - sb@smooth-commercial-law.co.uk
Paul McKittrick - paul.mckittrick@smoothlaw.co.uk 

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