Are business Interruption Claims due to Covid possible - Am I Covered?
Simply having business insurance with business interruption liability coverage, doesn’t mean you are covered when your business is interrupted.
Insurers are running test cases before the courts to understand their exposure to Business Interruption claims due to the COVID-19 global pandemic. Recently, the courts ruled against the insurers. Subsequently, the insurers have filed for a second test case. In response, IAG has requested a halt in trading on the ASX as it looks to understand its potential exposure and sure up its balance sheet. It is fair to say, there is a lot going on and a lot riding on the outcome of the court’s review Business Interruption liabilities.
8 Tips to consider when thinking about a potential Business Interruption Claim:
1: Know what your policy includes and excludes. Pull it up, and read through the terms of your policy. Whist your insurance policy might not all make total sense to you on the first read, it is important to know what terms are being referenced and key phrases that are being used.
2: See if your Insurer has made any public statements. For example, IAG recent trading halt as it sough to sure up its balance sheet is a sign that they are looking at their potential exposure to BI claims if the courts rule that they are included
3: Consider the interruption events for your business; were you forced to close by Government order, or was it simply uneconomical to open but you could have opened? Facing an uneconomical situation may not provide a legitimate reason, in regards to triggers for your insurance policy, for you to close
4: Review whether there was a trigger event that triggers your insurance policy into action? Trigger events for insurance policies are an event that occurs that causes the insurance policy to react. Knowing what the trigger event is fro your business and that it triggers your insurance policy is a critical piece in the BI claim process.
5: Review the documentation of your businesses journey over the past year and the decisions you took and when? Timing and the order of your actions can be critical in BI claims. Knowing what steps and course of action you took and when can impact the likelihood of a successful outcome or a claim being denied by an insurer.
6: Re-read messages and insights shared from your insurance broker. What has your broker communicated too you about BI and the likelihood of a successful claim with your specific insurance policy? Every insurance policy has subtle differences and so make sure your insurance broker is communicating with you around this evolving space of Business Interruption and ideally, with the specific context of your insurance policy
7: What have you communicated with your insurance broker? As the COVID-19 pandemic and lockdowns have rolled around the country, have you been in close communication with your broker to check the steps that you are taking to make sure you’re not violating the terms of your insurance policy? For example, leaving a premise unoccupied can require you to take certain steps to ensure it is protected.
8: Have a plan B: The global COVID-19 pandemic is a huge event with a significant impact of both SMEs, Insurers and the wider economy. As the Insurers continue with subsequent test cases before the courts. It could be prudent to start considering a Plan B if your BI claim won’t be successful. What would you do? How would you manage the impact on your business both in the short and long term?
Finally, if you need assistance, talk with an authorised insurance broker or authorised representative to better understand your specific insurance needs. Insurance brokers can assist by reviewing your existing policies and providing advice on how you can move forward.