Covid-19 – Insurance Q&A

S-Tech Insurance have provided a short overview of Covid-19 insurance related issues.

If you have any specific questions, please contact Josh on joshs@s-tech.co.uk to arrange a no obligation call.

Covid-19 –  Insurance Issues

1.     I have shut my business, does my insurance remain in force?

We have all had to follow government advice and instruction and insurers are playing their part by recognising these unusual circumstances and not unduly adding to the issues all businesses are facing.

Essentially, insurers are not treating the requirement to close as a standard unoccupancy event.  When properties become ‘unoccupied’ insurers normally impose additional requirements and reduce the breadth of cover.  This is because unoccupied premises carry a higher risk of, for example, fire and theft events.  Ordinarily, insurers need to be notified within 30 days once a property becomes unoccupied.

Currently, insurers are extending this need to report to anywhere between 60 and 90 days and even longer in some instances.  The exact period will depend upon your particular insurer.  So, in the short-term cover will not reduce but you will probably be expected, again particular insurer specific, to take certain precautions to help minimise any increased potential for loss; such as:

·       Ensure that all possible security measures are put in place including all doors and windows securely and properly locked (including fire doors).

·       Any intruder alarm should be set in the usual way.

·       If there are any issues with police response to intruder alarm, you should notify your insurer immediately

·       Where your alarm is monitored by a central station service, you should informed that the building is not occupied, so any alarm activation is responded to immediately.

·       Public Utilities should be shut off except where

1)     Electricity is required to power fire or intruder alarms or CCTV

2)     Water supplies where needed to maintain sprinkler systems

3)     Gas except where required to maintain heating – this will be a short-term consideration with the summer months approaching

·       All external combustible materials and waste should be removed or stored in locked lidded & fireproof receptacles if relevant to your business. 

This is very much a general overview of insurer considerations and you will need to talk to you own insurer to ascertain their particular requirements.

If in tenanted property, you might find the requirements of your own insurer and those of the landlord’s are different.

However, if your business was already closed prior to government announcement on 16th March, then you will probably find that the above terms are unlikely to apply to you and your insurer’s standard unoccupancy requirements are likely to apply.

2.     Am I insured for the impact, such as loss of revenue, that Covid-19 has had, and will have, on my business?

Despite government comment indicating that insurers would respond, you are unlikely to be insured for the consequences of Covid-19 unless there has been a specific occurrence of this at the premises you operate from or from a location nearby.  If this has happened, you should contact your insurer to discuss the question of any cover for resulting loss of income.

However, if you have any form of credit insurance, including invoice financing, you might find that this will respond in the event of failure of a customer of yours through insolvency or default.

3.     I’m not sure I can afford to maintain my insurance cover, what should I do?

Insurers understand this and most will be happy to adjust your premium based upon reduced activity levels within the business; e.g. gross profit, employees/wages/salaries, turnover, imports/exports, vehicle numbers.   So, you might be able to secure an immediate premium reduction through revisiting your insurance numbers.

If you pay your premium by instalments, you are likely to find the insurer, or independent finance house such as Close Brothers/Premium Credit, is prepared to reduce payments or extend the payment period.

Most insurers and finance houses are looking at all ways where they can possibly help their clients during this current period and, of course, they are hoping to retain their customers business when this crisis is over and there is a return to some form of normality.

4.     Are there any cover implications for reducing my premium values?

As mentioned above, most insurers are proving accommodating in helping you manage your premium costs and you should seek advice from your provider on the extent of any reduction available and possible implications of any changes.  A few specific points:

·       Employers Liability is a compulsory insurance; the premiums is based upon wages/salaries. The cover must be maintained, especially for those working from home, but the premium basis (wages/salaries) could be reduced to save premium

·       Public/Products Liability. Similarly needs to be maintained but, again, the basis can be reduced – this is primarily wages and turnover (including exports)

·       Marine/Transit insurance – similar to the above, premium based on volume of movement, imports and exports

·       Professional Indemnity Insurance. Should be maintained as cover needs to be in force at the time a claim is made (especially for work done in the past) but perhaps the limit could be temporarily reduced

·       Assets/Property – probably won’t change and most insurers have relaxed their ‘unoccupancy’ requirement from 30 to 60 or 90 days

·       Gross Profit. It should be easy to immediately reduce this number but, again, it is important to retain Business Interruption cover; this should also apply to working from home

·       Vehicles. Many insurers are providing premium refunds if vehicles are taken off the road

·       Travel Insurance – could potentially suspend

·       Premium Finance Houses – are offering payment holidays or extended terms. Important to maintain payment to ensure that insurance policies remain in force