Business Interruption Insurance

Published date30 June 2020
Subject MatterCorporate/Commercial Law, Insurance, Corporate and Company Law, Insurance Laws and Products
Law FirmRollits LLP
AuthorMr George Coyle

The pandemic gets Insurance Companies running for "cover"

Most businesses will invest in insurance to cover themselves in the event of risks that could damage their business. Such policies typically tend to cover damage caused by products or injuries caused to staff and others. Many policies will also cover "Business Interruption" which is specifically designed cover a business for loss of income during periods where it cannot function. The current pandemic is likely to result in many claims against insurance companies ending up in Court as insurance companies seek to limit their exposure to claims by their business customers for indemnity under their Business Interruption insurance policies.

It is common for such policies to limit the indemnity to circumstances where the business cannot function because its business premises (typically a factory) have been damaged (e.g. by fire). However some policies may not limit indemnity to circumstances of damage to business premises. In such cases whether the "Business Interruption" indemnity is triggered will depend on the specific word of the policy. The starting point for deciding, whether or not the current pandemic has triggered a "Business Interruption" indemnity are the words of the policy itself. Not only the wording of the "Business Interruption" indemnity need to be scrutinised but also the wording of other provisions. Some policies, for example, will provide indemnity in circumstances where access to business premises is prevented by a reason not related to damage to those premises.

Some policies will specifically cover "Business Interruption" caused by disease. Again, the wording needs to be closely examined because some policies will specifically identify the diseases covered (obviously, no chance of COVID-19 being covered in such policies) whilst other policies may have more general wording and cover "Notifiable Diseases". That is particularly important because...

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