Q&A: Am I insured for COVID-19?

Question

I rent a commercial space in Manchester on the ground floor of a building used as a hairdressing salon. I have experienced severe disruption as a result of the coronavirus pandemic, including closing my business during national shutdowns, and currently cannot trade from the premises. I am investigating the availability of government loans and grants to help me in these circumstances, but can I make a claim under my business interruption insurance policy? The policy contains a clause covering losses resulting from “any occurrence of a reportable disease within a radius of 25 miles from the premises”.

Reply

A claim under the “sickness clause” of your business interruption policy is likely to succeed because a recent model case in the Supreme Court found that clauses, like the one in your policy, will be triggered if the policyholder can establish that there has been at least one case of Covid-19 within a 25 mile radius of the premises. Whether a claim will ultimately be satisfied by the insurers will depend on the precise wording of the entire policy and whether you have informed the insurers of a claim within the timeframe required by its conditions, as well as on compliance with any other. condition applicable in your policy.

Explanation

The Supreme Court recently ruled in a test case involving sample business interruption insurance policy wording: Financial conduct authority v Arch Insurance Ltd and others [2021] UKSC 1; [2021] PLSCS 12. This study examined 21 business interruption insurance policies held by eight insurers. The case was brought by the FCA within the framework of the Financial Markets Test Case Scheme, which makes it possible to determine a claim in a typical case without the need for a specific dispute between the parties, when there is matters of general importance and that there is a need for immediately relevant and authoritative English legal advice.

The result was largely in favor of the FCA, benefiting many small and medium-sized businesses with business interruption insurance that suffered losses due to public health measures taken by the UK government during the pandemic. .

Your policy appears to contain a “sickness clause,” which is a provision for insurance coverage for business interruption caused by the occurrence of a reportable disease at or a specified distance from the policyholder’s business premises. ‘assurance. The court ruled that where the policy contained a sickness clause, similar to the wording of your policy, you are not required to prove that your losses were suffered solely as a result of one or more cases of Covid-19 in within 25 miles of the premises. . Instead, all you would need to prove is that there has been at least one case of illness caused by Covid-19 within the specified radius. In the current pandemic, this threshold will be easily exceeded in most cases.

Usually it is necessary to demonstrate a causal link between the illness and the losses you have suffered. Insurers argued that there was no causation because, even if there had not been a case of Covid-19 within the specified radius, the losses suffered would have been incurred anyway, as the main cause of these losses was the restrictions imposed by the government following other cases of Covid-19 elsewhere in the country.

However, the Supreme Court rejected this argument and decided that the question to be asked is whether the insured risk caused the business interruption within the meaning of the causal requirements of the policy, holding that it was sufficient to prove that the The interruption resulted from government actions taken in response to the coronavirus pandemic cases that included at least one case of Covid-19 in the geographic area specified by the clause.

As a result, you will likely be able to recover under your policy sickness clause if you can establish that there has been at least one case of Covid-19 within 40 kilometers of the premises. At the High Court of the FCA case, it has been confirmed that the data you can rely on to establish at least one Covid-19 case within a 25-mile radius of the premises includes publicly available NHS data, as well as data released by the Office for National Statistics or the government. Information on how to locate data sources can be found in FCA’s draft business interruption test case guidelines: https://www.fca.org.uk/publications/guidance-consultations/ draft-guidance-business-interruption-insurance- case-test-proving-the-presence-coronavirus

The Supreme Court ruling is based on sample policy wording from eight insurers. Therefore, you may wish to seek legal advice to determine whether your insurance policy was considered in the test case and whether, under the policy as a whole, you are likely to be able to successfully submit a claim.

It’s especially important to check the notification requirements in the policy to make sure you’re not late in reporting a loss to insurers (if you haven’t already). The FCA has published various guidelines and statements for policyholders which can be found on its website.

This article first appeared in Estates Gazette on February 10, 2021

About James Almanza

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