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Useful guidance for insured clients dealing with COVID-19 claims

There has been a great deal in the press recently about insurers rejecting coronavirus claims and disappointed policy-holders. Some of those speaking publicly on behalf of the insurance industry have not done much to dispel the confusion and get to the nub of the issue. The issue is not one of what the insurer “intended” to cover. It is a matter of what the policy says. We have had numerous enquiries from clients with questions about insurance policies and potential claims.

This is a brief summary of the issues along with some guidance for insured clients:

  1. Many clients understood and were advised that they have purchased extensions to their Buildings policy to cover scenarios including civil emergencies and outbreaks of disease. Most of these extensions provide cover only as an extension to cover for physical damage to property. We have, however, seen some Policies that provide free-standing cover for loss of revenue from emergency or disease. This may or may not have been intended by the insurer. Poor drafting may mean that the insurer is exposed to a valid claim (or a multitude of claims) on the policy.
  2. There is a common misconception that if an event is covered (e.g.: an emergency or pandemic) then the insured can put in an insurance claim for the drop in revenue experienced over the period of the lockdown. In fact, proving the causal connection between the event and the loss is often the most difficult part of any insurance claim. For example it is easier for a restaurateur to show lost revenue if diners cannot attend the restaurant than a business with an office block and a workforce who can fairly easily work from home. The latter might have a policy that covers coronavirus but absolutely no claim for lost revenue.
  3. Insurance Policies sold to the Construction industry are in the spotlight. Many contain cover for physical damage plus loss of revenue from delayed completion as a result of things such as “notifiable disease”. There are some interesting issues around the addition of Covid-19 to the list of notifiable diseases under the Health Protection (Notification) Regulations 2010
  4. Many clients have been disappointed at the service they have received from their insurance brokers. One broker notified a claim under the wrong (irrelevant) section of the Policy and then said “it’s been rejected”; another advised a client that the claim was not covered but they might make progress if the government “applied pressure” to insurers to pay out for coronavirus claims.

Clients with potential coronavirus claims should:

  1. Start with your broker. Get the broker to advise you on your potential claim and if the advice is “not covered” ask for the reasoning.
  2. Notify your insurer of the claim regardless, following the claim notification section of the policy.
  3. Seek legal advice about whether you have a claim and the quantum of any claim.

Please contact our insurance team if you require further assistance.

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