Some insurers are refusing to pay out on legitimate business interruption claims, leaving many businesses helpless. If your business is one of them, Smooth Commercial Law can assist.
Many prudent business owners often take out a type of insurance that covers them should their company have to close due to no fault of their own. This type of insurance is called “Business Interruption Insurance” and is offered by many insurers, including AXA, Hiscox, Aviva, Allianz and Beazley.
Business interruption insurance is often a vital part of cover for a range of companies – ranging from small businesses to multinational companies.
Generally, these policies are designed to provide cover for physical damage that stops a business trading – like fires, floods and natural disasters. However, some business interruption policies can be upgraded to include some form of cover for certain diseases.
Your business’s ability to trade could be impacted by:
- A fire or flood that damages key office space
- Damage to stock
- Breakdown of equipment that is fundamental to business operation
- A key supplier being unable to reach you
- People not being able to get into your business premises
- An occurrence of any human infectious or human contagious disease
If any of these incidents happen, your business may incur unexpected costs and lose the ability to generate income. This would usually be where the business interruption insurance would cover costs if the appropriate cover has been purchased.
The insurance policy provides what is known as a “material damage proviso”. This simply means that the policy will pay out following a claim made against your company building or contents insurance, and covers financial losses that are a “direct consequence of a business interruption”, such as loss of revenue, loss of rental income, and additional staff costs.
However, the process of claiming on this type of policy is no simple task. It takes a lot of time and effort to correctly detail how your business would be performing if the disruptive incident had not taken place. Insurers also need to see evidence of the disruption and can often refuse to payout.
If you believe you have taken out the appropriate business interruption insurance policy and your insurer is refusing to pay out, Smooth Commercial Law may be able to help you pursue them for the compensation you deserve.
COVID-19 and Business Interruption Insurance
In relation to COVID-19, and the human disease part of the cover, many insurers are refusing to pay companies despite the business owners having the appropriate policy. Some hotels, bars, dentists and barbers have had to close their doors through no fault of their own are now left with weeks until they go bust.
Each policy will, of course, be different, and many companies will need to check whether particular diseases are listed in their policy, but very often the wording of the policies is ambiguous and there is room to challenge the insurer. Several insurers have been accused of wriggling out of their obligations through these policies not being worded clearly.
Though many policies will not cover COVID-19, the UK’s financial watchdog, the FCA, has warned insurers that there are incidents where it is clear that the insurer has an obligation to pay out on a policy. They are seeking clarity from insurers why this is not happening.
There are now widespread concerns from UK businesses who have had to close their doors due to the COVID-19 pandemic. Many of these businesses were paying thousands in insurance premiums every year, only to now be told they do not qualify for compensation.
The issue is currently making headlines in the UK, with hundreds of businesses taking on Hiscox.
The FCA are asking the UK courts to resolve this growing controversy over whether the coronavirus lockdown is covered by business interruption insurance. The courts are likely to be asked to rule on whether a few key clauses provide coverage. The main clause will be in relation to whether the policy holder cannot use the premises because of “restrictions imposed by a public authority”.
Smooth Commercial Law are keeping a close watch on how this pans out in the UK courts, as it could pave the way for many businesses to claim the compensation they deserve against insurers.
How can Smooth Commercial help you if you have been affected?
At Smooth Commercial Law, our team of legal experts have extensive experience in dealing with a whole manner of commercial dispute claims. We are seeing more and more cases relating to business interruption insurance, and can help you challenge your insurer. Whether it is against AXA, Hiscox, Aviva, Allianz, Beazley or any other insurer, we will fight your corner.
Should you have a claim against your insurer, we can deal with your case and look to recover compensation.