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The question for many businesses is whether their insurance covers losses arising from COVID-19

COVID-19: BUSINESS INTERRUPTION INSURANCE

Many businesses throughout Ireland are now facing the human, social and economic implications of COVID-19. The pandemic has caused businesses such as retail outlets, bars, restaurants, and hotels to suspend their operations. There is an understandable concern about the financial losses incurred as a result of COVID-19 and many businesses will now be looking to their insurance to cover the financial losses.

 

Business Interruption Insurance and Covid-19

Business interruption policies (sometimes referred to as consequential loss, or loss of profits policies) are policies of indemnity that provide cover for loss resulting from the interruption to an insured’s business as a result of physical damage to the insured property. Typically, business interruption insurance policies will not provide cover for losses resulting from infectious diseases unless specific business interruption extension is included in the policy.  

The wording contained in each policy of insurance will be significant in determining if insurance companies are obliged to accept liability on an insurance claim for business interruption. Some insurance policies provide non-physical damage extensions to their business interruption cover and in certain instances may cover loss resulting from interruption to the insured’s business as a result of an occurrence of a notifiable human disease.

Where a policy provides cover for an outbreak of an infectious disease, an insurer may be expected to meet claims where the loss arises from an outbreak of an infectious disease on the property or where the business is restricted from trading by government as a result of such an infectious disease.  Whether a policy will offer this kind of cover will very much depend the specific facts of the case and specific wording of the policy in issue.

 

Business Restrictions and Closures:

Certain policies may not expressly address losses resulting from the outbreak of an infectious disease and may instead only expressly provide cover for financial losses resulting from interruption to the business due to restrictions or closures imposed by public, local or government authorities. Policies may contain a prevention of access clause and this in turn could provide cover for a business interruption claim during a pandemic.

Our advice is each policy of insurance is different and businesses should have their policies examined to clarify if it has any cover for losses arising from the current crisis and establish whether the present circumstances trigger the cover provided under the relevant insurance policy. It is important to remember that if there is a potential insurance claim, the terms of the policy must be followed including the appropriate notification of any claim arising from the policy. An insurer may not indemnify a business where policy requirements relating to notification and loss management are not strictly adhered to by the business.

In the event of a dispute over whether COVID-19 triggers business interruption coverage, legal action may need to be threatened or required to compel performance of the contract of insurance and ultimately compensate the business once losses are ascertained.

 

How can we help?

The team here at Joyce & Co Solicitors can assist businesses in addressing their questions and concerns relating to insurance cover and advise on a wide range of issues a business may face during the COVID-10 crisis. 

For further information and expert guidance regarding a business interruption insurance claim please contact