COVID-19: Your Questions & Answers
August 19, 2020
We are committed to continuing to provide the great service our clients have come to expect, especially in these turbulent times.
We’ve received many questions about how different parts of insurance policies will respond to COVID-19 and insurers are starting to formulate their responses, which means we are now in a position to better inform you.
To help you navigate through some of these we have put together a high-level response to some of the more frequently asked questions, which we hope will help you. For more specific queries or for further clarification please don’t hesitate to call or email our Commercial Account Handling Team who remain ready to answer all your questions.
We also have a dedicated ‘COVID-19’ section of our website which acts as a repository for all information and advice/support resources that we have been publishing throughout the ‘lockdown’ period and beyond. To visit the dedicated section click here.
In addition to our own dedicated resources and support, we recommend that you also refer to the official Government and BIBA (British Insurance Brokers Association) websites for up to date information and advice. It is vital that everyone remains in a position of awareness and responsibility not only for their business but their workforce too – the situation surrounding COVID-19 remains fluid therefore many updates are released on a regular basis. You can also follow us on social media such as Twitter and Instagram (click either of the names to go directly to our profile page on these platforms respectively).
Business Interruption Insurance (BI) provides cover for the financial losses due to an interruption or interference to the business subject to the sum insured and terms, conditions and exclusions of the policy. This section of cover is principally triggered following damage caused by an insured peril (for example, fire or flood).
If your business suffers a reduction in turnover due to Coronavirus, this will not be covered by insurance. There are Government initiatives to help support businesses through these uncertain times.
This is either because the policy was intended to respond to certain events which this pandemic is included in or where some insurers have worded their policies poorly leaving them open to questions from the regulator and or legal groups.
We have contacted all policyholders who could be affected by the FCA’s judicial review. Don’t hesitate to contact us if you feel you should have been contacted.
This depends on the Insurer and the policy terms.
All policies will exclude disinclination to travel due to COVID-19. Some Insurers have started to apply a COVID-19 Exclusion on their Travel policies, typically in respect of the Medical Expenses and Travel Disruption sections of cover.
You should check the terms and conditions of your own policy prior to travelling. All policies will only respond if you are travelling following the guidelines of the Foreign and Commonwealth Office.
The UK suddenly places a travel ban on the country you have booked to travel to due to a COVID-19 outbreak. You could be responsible for additional hotel or rebooking charges.
Some policies may still offer you medical cover. We would advise you to check the terms and conditions of your own Travel policy and also the FCO website for their latest advice prior to booking and/or travelling – click here to visit their website.
You must act prudently to secure your premises and reduce the risk of theft or damage.
Most policies include strict Unoccupancy Conditions that must be complied with in the event that your property becomes unoccupied for more than 30 days. Failure to comply with these Conditions may leave you uninsured. In addition, cover may automatically reduce to Fire, Lightning, Explosion and Aircraft only after this period.
If you are working on a construction site which is closed as a result of a Local Authority or Government lockdown, Insurers must be advised within 30 days of the stoppage and additional terms and conditions may be applied.
If you think the property will be unoccupied for more than 30 days or if you are unable to re-open your premises following a lifting of Government restrictions, please call us immediately. If the construction site you are working on is closed due to COVID-19, please call us immediately.
Public Liability policies provide compensation to third parties for which the policyholder is legally liable due to third party injury or third-party property damage and the legal defence costs in defending these allegations.
Although it is unlikely a business could be held liable for damages due to a third-party catching coronavirus if a solicitor letter comes through the door the recipient has to respond to this. The legal defence cover within a Public Liability would help the policyholder with this, preventing legal costs.
Although you may correctly believe that it would be unlikely that you could be liable for giving coronavirus to a third party it does not prevent people trying to sue you for this.
It is not beyond the realm of possibility that ‘no win no fee’ solicitors are looking at this as a possibility. The PPI deadline passed last year so there is the resource available for this to be the ‘next PPI’.
This section of the policy was never designed to cover a pandemic and the subsequent restrictions this has placed on us all. Some insurers have sort to clarify this by inserting an exclusion.
A judicial review will be finalized by the end of September 2020 which will help deal with any policies where cover may be in doubt.
Directors’ & Officers’ Liability cover provides indemnity in the event of a claim against the Directors’ or Officers’ of a business following a decision or process regarding how to operate in business.
This could be particularly relevant as businesses adapt to operate through a lockdown and the COVID-19 pandemic and then handle the return back to work which could leave them exposed to a Management Liability claim. There is no set way of how to deal with this situation and there could be conflicts with; other directors, investors, employees, customers & even the wider public.
Employment Practice Liability coverage could also see claims if business owners make decisions on staff redundancies, furloughing staff or even staff returning to work.
If you are thinking of taking a D&O policy with a COVID-19 exclusion then you need to be aware that all of the new processes that you have put in place since March 2020 will not be covered by the policy, which may leave the business exposed, especially as some of these claims may not manifest themselves until years down the line.
Professional Indemnity provides covers allegations of third-party financial loss due to inadequate advice, service or designs. Again, both damages and legal defence costs are covered.
If your policy has a COVID-19 exclusion, it is likely that damages and/or legal defence costs would not be covered for any losses attributed to COVID-19.
If we start with advisors; there are not too many professionals not advising on COVID-19, management consultants, legal professionals, health and safety consultants, recruiters and insurance brokers. All would have in some way changed and altered their advice to fit the current climate. Allegations of incorrect advice leading to a third party financial loss would be covered by Professional Indemnity
On service, if a policyholder were unable to hit agreed service standards due to the COVID-19 lockdown there could be accusations of a ‘breach of contract’ especially if businesses are looking to get out of previously agreed contracts. Civil Liability wordings will provide Breach of Contract cover.
Design, D&C PI would cover the failure of the policyholder to warn their client of any inadequacies of deficiencies in design or specification. If an accusation came to the policyholder for say failure to advise that the premises would not be suitable for social distancing a PI policy would respond
Hopefully, this has answered the questions that you have needed clarification on. These are the most frequently asked questions that our teams have been answering during COVID-19, however, we understand that every business, every policy and every client is unique in their own ways, so if you are still looking for the answers to other questions, no matter how significant or otherwise, please do not hesitate to give us a call on call us or email us.
We also constantly review the information and support that we are producing and publishing on our website, in email updates and on social media, so please remember to follow us on Twitter & Instagram (@Flint_Insurance) and get the latest resources and advice from our teams on your favourite apps and platforms.