These are challenging times and it is understandable that those of us suffering an impact on our businesses naturally look for whatever help and support is available.
There has been a lot of confusion and misunderstanding by the Manx business community regarding insurance and COVID 19, particularly following the UK chancellor’s announcement that declaring a pandemic would trigger cover under insurance policies.
We therefore wanted to clarify the position and answer some of the common questions.
The UK chancellor’s declaration of a pandemic was intended to trigger the cover on a very specific type of insurance called “Pandemic Insurance “. This cover is taken out by a small number of large multi-national businesses mainly in the Hotel & Leisure Sector and therefore had no effect on the vast majority of insurance policies arranged by Manx businesses.
Business Interruption/Loss of Rent
The intention of the policy is to cover loss of rent/businesses interruption following an insured event such as Fire, Flood etc. One of these events has not occurred.
There is an extension under many policies which provides limited cover as a result of a premises being closed due to an outbreak of a notifiable infectious disease at that premises. The diseases usually listed are:
This list doesn’t contain COVID 19 as it wasn’t known at the time. However, even if listed (or if the policy doesn’t specify the diseases) cover would not have applied as the cover is for interruption as a result of an outbreak at (or near depending on the policy wording) the specified premises.
The loss that many of us are suffering to our businesses (some obviously more than others) is due to government policy ordering a lock down in order to fight the virus rather than an actual outbreak at our premises. There are then knock on effects on businesses such as insurance brokers or landlords where some clients/tenants are then not able to fund their insurance premiums or pay rent due to a loss of business.
It is similar to a war situation where it is the government rather than insurers that compensate those affected. The Manx government has instigated a number of measures such as Covid-19 Salary Support Scheme, Corona Virus Business Support Scheme, Strategic Capacity Scheme, Isle of Man Disruption Loan Agreement and Business Adaption Grant. If your business operates in UK you may be eligible for UK government back Business Interruption Loans, Employee Wage Furlough scheme and direct grants for small business. You may be entitled to some assistance here.
There are admittedly some insurance policies where the wording is not as clear as I have described. The current legal opinion in UK seems to be that in order for these policies to pay out then the UK courts would have to extend the ordinary meaning of “outbreak” to infer that losses resulting from “the consequences (i.e. government intervention) of an outbreak of the disease should be included”. This will only be settled by legal action.
Assistance Provided by Insurers
Even though insurance policies are not intended to respond to provide compensation the insurers are being flexible in other areas where your policy cover may be affected
Insurance policies have conditions regarding inspection of vacant premises, cover restrictions and notification to them. It is likely that your premises may become vacant and as a result of the lock-down you are unable to comply with the requirements under the policy. Insurers are being flexible and understanding in this situation.
Many businesses are mitigating their losses by diversifying for example offering delivery services, retooling production lines etc. This could affect your insurance cover so it is important to discuss it with us to discuss the implications.
If you have unnecessary cover and need to reduce sums insured, policy estimates, or laying up vehicles then return premiums may be possible.
Group Travel Policy
If you have any cancelled trips and are unable to receive a refund you should be able to claim.