The COVID-19 pandemic has many business owners concerned about the continuity and prosperity of their business. Various schemes have already been implemented by the government to reduce the negative effects of this pandemic such as the Small Business Grant Fund, rates holidays and the Job Retention Scheme. However, there may be additional steps that you can take to ensure the long-term security of your business. The most important thing you, as a prudent business owner, should do is to carefully review your business interruption insurance policy.
Business interruption insurance is purchased as a method of protecting the business in the event that it sustains some sort of physical damage which prevents it from trading. These policies can go beyond what general buildings and contents policies will cover and can include cover for consequential losses such as loss of revenue, rental income and additional staff costs.
These policies are usually designed to cover natural catastrophes such as fire and flooding. However, some policies will extend to cover pandemics.
When looking at your policy, it is essential that you pay close attention to the following:
Does your policy include cover for notifiable diseases?
The government officially named COVID-19 as a ‘notifiable disease’ on 5 March 2020. Most business interruption policies will include cover for notifiable diseases. What is important to look at here is whether your policy specifically states which notifiable diseases are covered. Your policy may contain a specified list of diseases. If this is the case, it is unlikely that COVID-19 will be covered as it would not have existed at the time the policy was written. If there is not a specific list of diseases included in your policy, you may be covered against losses arising as a result of the current pandemic.
Does your policy include cover for loss resulting from the action of a competent authority?
If there is a list of specific diseases, check whether your policy includes cover for interruption of the business as a result of the actions of a competent authority in the vicinity of your premises. What is classed as a competent authority will usually be defined in your policy. Your policy may also include insurance cover for your business where the competent authority has prevented access to the premises.
If you are concerned about the long-term security of your business, it is essential that you take a look at your business interruption insurance policy. The wording of these policies can differ greatly. If you are unclear about any aspect of your policy, be sure to contact your insurer, broker or solicitor.
Should your policy not cover losses due to the coronavirus, the government also offers the Coronavirus Business Interruption Loan Scheme (CBILS) which may be a worthwhile avenue to explore. The CBILS is available to small and medium sized businesses with an annual turnover of up to £45 million and provides access to loans, invoice and asset finance and overdrafts of up to £5 million. Full details of the CBILS and eligibility can be found on the NI Business Info website www.nibusinessinfo.co.uk The Invest NI helpline is also available to provide advice to businesses during the COVID-19 pandemic.
Chris Ross (firstname.lastname@example.org) is Managing Partner at McKees (www.mckees-law.com) specialising in commercial disputes and helping clients avoid disputes where possible.