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What to do if your Business Interruption insurance policy has let you down

Legal expert Susan Hopcroft explains how to read your policy and work out if it's worth challenging the insurer's decision to turn your claim down – and what to do next.

Nigel Lewis

business interruption

Thousands of estate agents were outraged during the early days of the Coronavirus crisis to find out that their Business Interruption (BI) Insurance did not cover them during the pandemic.

And agents are not alone in believing some insurers have acted unfairly – the Financial Conduct Authority recently announced it is going to court to seek ‘legal clarity’ about when insurers can and cannot refuse claims and has written to insurance firm CEO’s to remind them of their responsibilities.

In the meantime, expert Susan Hopcroft of legal firm Wright Hassall explores how affected agents can find out where they stand.

Check your clauses

“Business should check whether BI is covered in their insurance schedule, then go to the policy wording and look up the BI section, which may contain several useful clauses.

“Standard business interruption covers loss of income when the business cannot operate normally, and some policies may have extensions that could apply to coronavirus losses.

Business Interruption (specific illnesses)

“Most extensions cover a list of specific diseases and because Covid-19 is not listed, insurers will deny claims. Businesses will argue the cover they bought could not have named a disease that did not exist. Some disease extensions do not specify diseases and BI cover for Covid-19 is more likely to apply.

“Insurers will not have been expecting to pay for a long term shut down due to a global pandemic, but each clause is different, and you should check your wording.

Business Interruption (non-damage denial of access)

“Cover for losses because people cannot access the premises due to specific circumstances like the police cordoning off an area due to an event such as terrorism or a fire.

“The clause might cover inability to trade due to a government restriction, which is what has happened with the imposed lockdown and these clauses might cover loss, but again the wording is critical.

“The final step is to join a group action (called a Class Action in the US), ideally with a solicitor experienced in such matters, who has funding organised to fight the claim on behalf of all the claimants, who are effectively sharing the legal costs and risk.

“Claimants in the UK, must ‘opt in’ and agree to be part of the litigation, but there is no simple way to find others pursuing claims other than a Google search for law firms discussing the group action they are undertaking.”

Read more about agents and business interruption insurance.

May 28, 2020

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