Covid-19 and Claiming Losses… The great majority of business interruption (“BI”) insurance policies will not cover losses resulting from the Covid-19 pandemic but if you do have cover, what can you claim?
Notifying your Insurer
- If you believe you have a claim, you must formally notify your insurer as soon as possible that you want to make a claim under the policy.
- One of the key clauses in an insurance policy relates to the time in which the insured has to notify their insurer of any claim. If the insured is late in notifying the insurer of a claim, the insurer can refuse indemnity.
- As many such claims will be disputed, it is more important than usual to ensure that your notification letter or e-mail refers to the specific policy wording you are relying upon and shows how your claim meets the relevant criteria.
Claiming Losses caused by suppliers or customers
- Some policies will have “contingent business interruption cover”, which may cover losses resulting from problems with a supplier or customers, although it is often property related. For example, there may have been a fire at your business premises which means that it is unsafe for customers to visit.
- If the contingent business interruption cover comes into effect due to Covid-19 and that in turn has then led to your suffering financial loss, then there may be the possibility of a claim.
- You will need to check the policy wording carefully.
Proving that Covid-19 caused loss
- If you can make a claim under your insurance policy, the next problem is then proving “causation” – in other words, that any losses you intend claiming for as a result of business interruption were directly caused by Covid-19 and the resulting emergency measures in force.
- For example, did you close down due to a lack of staff, as they were self-isolating; a fall in business; or due to the Government forcing closure?
- This is likely to be a key battle ground for insurers trying to avoid a claim under the policy.
Proving the Losses
- If you can satisfy causation, you must then prove the losses claimed.
- If you are claiming for a loss of business and the resultant income, then this can only really be done by way of accounts and projections for your business.
- This evidence is always open to attack by insurers, who will look at other reasons which may have reduced your projected or actual income, so reducing the value of any claim made.
- The more evidence you can produce, the stronger your position will be in proving the loss suffered.
Duty to Mitigate Loss
- An insured has a legal duty to mitigate – or minimise – their loss as far as is practicable.
- You will need to consider what losses you are claiming for and decide whether there is any way that these could be reduced by your taking different action.
- For example, can your business adapt and offer another product or service which would produce income? Can your employees continue working remotely? Can you stop or place on hold any outgoings?
- This is another area of scrutiny for any insurer looking to pay a claim.
Claiming Losses: Summary
- Check your policy wording carefully.
- If you have an insurance policy which you believe covers your business against losses caused by Covid-19 and you can prove the same and the extent of those losses, you should notify your insurer as soon as possible.
- Although insurers are required by law to pay within a “reasonable” time, it is likely that claims will be delayed whilst insurers adopt a standard stance or even wait for test cases to be heard by the Courts.
If you need advice as to your Business Interruption Insurance Policy and claiming losses caused by COVID-19, contact Michael Mulcare at firstname.lastname@example.org
SO Legal Solicitors Eastbourne – 01323 407555
SO Legal Solicitors Brighton & Hove – 01273 069920
SO Legal Solicitors Hastings – 01424 709050
SO Legal Solicitors Uckfield – 01825 729840
SO Legal Solicitors Notting Hill – 0203 9677700