Coronavirus (COVID-19) - Is your business insured against the risks?

In this blog my colleague Laura McMillan and I discuss the adequacy of insurance, and how that may affect businesses during the COVID-19 outbreak.

As the number of confirmed cases of COVID-19 in Europe continues to grow, most companies and organisations are doing all they can to minimise the impact on their business. Quite rightly, the primary focus is on protecting people, but the financial implications cannot be ignored.

Businesses might assume they are insured against many of the risks associated with the COVID-19 outbreak - but are you sure you are covered? What about the difficulties you might have purchasing an insurance policy in the current climate? We look at some specific examples below.

In all cases, we recommend businesses check their current insurance policies to find out exactly where they stand. The policy wording may not be clear - so if in doubt, speak to your broker, directly to your insurer or seek legal advice.

When you have a better idea of what you have cover for, you can plan better for your current and future potential COVID-19 related losses.

Business Interruption Insurance

COVID-19 was listed as a 'notifiable disease' by the UK government on 5 March 2020 and in Scotland on 22 February 2020. 'Notifiable disease' is a public health term, which requires GPs by law, to report diagnosis of such diseases to Public Health England or the relevant Scottish Health Board (e.g. NHS Lothian). It is not a term used by the insurance industry.

Many business interruption policies will only cover diseases already named in the contracts. A number of insurers have already clarified that their policies do not include a general class of 'notifiable disease'. This approach will be mirrored in many business interruption policies. However, insurance policies are often tailored to the policyholder, so the extent of disease cover will vary.

Even if, on the face of it, there is cover for losses associated with the virus - some business interruption policies will require loss or damage to property before cover is triggered. Such loss may be absent in a COVID-19 claim. Further, the policy might not pay out if the losses arise from precautionary measures as opposed to an actual COVID-19 outbreak in the workplace.

Travel Insurance

Some travel insurance providers have taken themselves out of the travel insurance market (at least for the time being). Others are altering the scope of new policies, e.g. by preventing additional add-ons such as 'travel disruption or cancellation'.

The validity of travel cover is often affected by any announcement by the Foreign and Commonwealth Office warning against all or all but essential travel to a certain country. Although it is unlikely UK businesses will be requiring their employees to travel to Category 1 countries during the outbreak, your policies may also contain restriction on cover for travel to Category 2 countries (of which the list is considerably longer).

Liability Insurance

As we commented in our recent professional liability claims blog, economic downturn and the resulting economic hardship suffered by individuals can often lead to an increase in claims. Following a public health pandemic, this may take the form of a rise in personal injury claims by those who allege to have contracted the disease as a result of negligence on behalf of a company or an employee. These claims may be directed against businesses by workers, or potentially, members of the public - depending on the sector in which you are operating.

Whilst these types of claims might well be difficult to prove, there may still be costs involved in dealing with them and so, in addition to taking all reasonable steps to protect those affected by your business (see a previous blog from our Employment colleagues here and our legal update here), you might want to bottom out whether your employers and public liability insurance will cover you in the event of a claim or claims being made.