Business interruption insurance – policy checker Click Here
The Financial Conduct Authority (FCA) have published an on-line ‘Policy Checker’ designed to help policyholders find out if their insurance policy may cover business interruption losses caused by coronavirus and what they can do next.
Before you run the policy checker please ensure that you have you full insurance policy in front of you.
To proceed to check your policy: Click Here
There is also a Policy Holder FAQ page: Click Here
NFU Mutual Policy Holders
After considerable correspondence from one of the AIMS members with NFU Mutual in relation to this wording on their policy:
Business Interruption – Gross Profit
Customers and Suppliers unspecified – 15% of sum insured, limited to £1,000,00
They have been provided with an explanation which says:
The cover provided by your policy under the Cover Extension to which you refer under the Business Interruption Section of the policy for Customers and Suppliers is as follows:-
Customers and Suppliers
WE will pay for loss of GROSS PROFIT arising from DAMAGE to PROPERTY at any of the premises of YOUR existing and direct:
or 2 suppliers of goods or materials; situated within the GEOGRAPHICAL LIMITS and arising from an INSURED PERIL.
The most WE will pay for any one loss is shown on YOUR schedule.
In this instance there has been no damage to Property at the premises of your customers to which the policy can respond.
We have discussed this response with AIMS’ Legal Director, Stephen Lomax. He has reviewed the NFU Mutual policy documents and as they have not offered cover against the ‘Insured Peril’ of Coronavirus, any other infectious disease or official action closing or financially inhibiting the business, they will not settle claims because they are simply completely outside the scope of the policy.
Recent high Court litigation in which AIMS was successfully involved was quite different. In these cases, the policy was ambiguous and a reasonable person who had read the policy properly might have honestly believed the complex of issues affected by Coronavirus might have been an insured peril.
Furthermore the policy is worded in respect of your own business and your customer’s businesses. Up to 2 of your customers or suppliers are covered but only for exactly the same perils as your own plant ie. NOT coronavirus consequences. In other words, if your 2 largest suppliers or customers are subject to fire or flooding or hit by an aeroplane crash, you will have a claim for the applicable percentage of the impact of the peril on YOUR profit. There is no cover in respect of your customer or supplier's profits.
The issue as to whether they are acting in line with the FCA’s code of conduct, namely to act fairly and to settle claims in a reasonable time wouldn’t be relevant here as their policies do not include Coronavirus or any event flowing from it within their list of insured perils.
Small businesses, those with a turnover of less than £5miilion, may wish to make a complaint to the Financial Ombudsman Click Here but it our belief that unless your policy clearly identifies epidemic, infectious disease, government statutory powers terminating or inhibiting production or some wide category that could include such events, you have no claim. Lists of insured perils , not to mention the entirety of insurance policies, almost never include wide and comprehensive risks but define highly specific events. Indeed , lists of perils are often "fleshed out" by comically unlikely disastrous and highly specific event, presumably to reassure those who believe they might be unbelievably unlucky.
Countless hours spent reading insurance policies has turned up a number of other potentially alarming aspects of members' policies not directly related to COVID. Another update on more general insurance hazards, those created by policy wording, will follow in due course.
Everyone at AIMS is here to support any members, please email if you have any questions.
MORE THAN EVER PLEASE STAY SAFE – STAY WELL