Holidaysplease director Charles Duncombe says a recent High Court ruling means the company is covered for £100K
The small print in business insurance policies often feels like a series of mini land mines designed to blow a hole in any insurance claim you may wish to make. However, thanks to a recent case in the High Court, this small print could work in your favour and help your business ride out the Covid-19 winter.
Many standard business insurance policies contain business interruption cover to compensate you if your revenue drops due to certain specific conditions. One of the conditions in the small print is often a ‘notifiable disease’ clause. This will trigger if there is an outbreak of a notifiable disease within a certain distance of your office or shop, and it restricts your access to those premises.
Insurance companies have been trying to claim that Covid-19 does not fit within the scope of the policy and therefore they have been refusing to pay out to policyholders. The Financial Conduct Authority (FCA) took the opposite view and launched a ‘super complaint’ in the High Court, which they won this month. The court ruled that Covid-19 was a notifiable disease and that government orders in the spring to tell people to work from home were essentially orders to close offices. They therefore said that many of these policies were indeed valid.
As you would expect in a 162-page judgement, there are a number of subtle nuances, and a pay day isn’t 100% guaranteed for every business, but I would advise all business owners to check their insurance policies if they have not already done so. Look to see whether you have business interruption cover and, in particular, if there is a notifiable disease sub section within it. If there is, then contact your insurance company or insurance broker and put a claim in for the losses you have suffered.
If the insurance companies don’t appeal the High Court ruling then they are likely to pay out claims in the date order they receive them, so the sooner you submit yours the better. As part of this exercise they may want proof of loss, so it’s worth documenting all of the losses you are suffering at the moment and extra costs you are incurring on account of Covid. It shouldn’t be too hard for travel companies to show Covid losses at the moment!
Hundreds of thousands of businesses hold these policies, and many may not realise. When I checked our policy I found that we had £100,000 of cover in place and that it lasts for a period of 18 months, so it should even cover us going in and out of lockdown for up to another year.
So, while reading insurance small print sounds like the most boring thing on the planet, I found that with a potential £100k prize dangling at the end of it, it was exciting as the most gripping whodunnit.