Empty business premises, company vehicles making home deliveries and unusual stock levels… Some insurance companies are covering these signs of the times at no extra cost.

As week one of another three-week coronavirus lockdown commences, some businesses are battling on, others are battening down the hatches. 

But whichever way a firm decides to jump, there’s likely to be stock, staff, premises and vehicles to safeguard. 

ETN asked the insurance experts at SEIB how best to cover yourself against the unexpected in this changed commercial climate – without incurring huge costs. 

Q. Businesses that are finding things tough at the moment might consider saving money by cutting back on some elements of their insurance cover. Is this feasible if, say, they have been forced to shut a brick-and-mortar shop?

A. Insurance is rated to reflect the risk and the circumstances. If the circumstances change - as has been the case with many a business during this coronavirus outbreak - the insurance can often be adapted to reflect the situation. 

To cancel a policy could be short sighted and is often unnecessary, the important consideration is to remain protected against any risks that could affect the business. 

For example, even if closed, a brick-and-mortar shop will probably still hold stock which could be subject to theft and it is possible that a leak could lead to a flood.   

Both of these scenarios could spell the end of a business should all the stock be damaged or lost without the recompense of an insurance policy.

We would strongly recommend that you speak to your insurance broker to find out if any tweaks can be made in the cover and if any savings are available. Often by reducing the level of cover, the premium price can also be reduced. 

Some of the liability cover also may not be needed and therefore savings could present themselves. 

Remember that these circumstances are likely to be outside the standard remit of any policy and the insurers are working hard to ensure cover reflects the situation. We should point out that in some cases, if the level of cover is changed, an administration fee may apply. 

Every company is different so it is imperative for the business owner to contact the insurance broker as soon as possible to discuss the options.   

Q. There seems to be some confusion about whether business disruption due to Covid-19 enables insurance claims under force majeure.  

A. Force majeure is a phrase used in legal documents to refer to an intervening act that is entirely outside a party’s control. Force majeure events often include natural disasters such as earthquake or volcanic eruption and war or war-like situations. 

Currently there is no evidence to say that UK insurers will consider insurance claims for business disruption caused by Covid-19 under force majeure. 

Some business insurance policies will include business interruption cover that extends to disruption caused by a specific list of named infectious diseases. Only if the loss is due to one of the listed diseases, will cover respond to any financial loss. 

In the UK, insurers use this precise approach of naming individual diseases because they cannot cover risks that cannot be assessed. 

As Covid-19 is a brand new (or novel) virus, you will not find it on the list of insured diseases for any UK insurer so are unlikely to be covered by any business interruption policy.  

Q. What cover do employers need for staff who are working at home?

A. If you have any member of staff who is now working from home, maybe undertaking clerical duties, we recommend that the business policy includes cover for loss or damage to any contents temporarily removed from the main business premises to employees’ homes. An example would be laptops. 

If a business has employees, then cover for employers’ liability must form part of the business insurance arrangements and should extend to protect any of member of staff who is home-based.     

As organisations are forced to look at different working models, some useful resources for employers are signposted by the Health and Safety Executive on their latest information and advice page HSE COVID-19 information and advice together with guidance on homeworking and working alone.  

Q. Can SEIB offer any tips for getting through the coronavirus pandemic with a business intact and ready to trade when things get back to ‘normal’?

A. Across the UK, businesses are trying to adapt to the changing needs of their customers during lockdown. 

As you make such changes to your own business, it's important to keep your insurance providers firmly in the picture. They can then ensure that your business and vehicle insurance arrangements continue to protect you from unexpected events that can still threaten your livelihood.   

Many insurance companies are already including additional cover to accommodate changes to the commercial activities and working practices of businesses, at no additional cost. 

Here are some examples that we have come across during the last few weeks:

  • Automatic uplifts in sums insured for stock, as you may find yourself carrying higher levels of stock at this time, e.g. horse feed. 
  • Allowing use of vehicles to make deliveries to the homes and yards of customers - horse feed and bedding are considered to be essential supplies - as well as for humanitarian volunteering activities in support of the community.
  • As already mentioned, you may now have homeworkers, and most insurers will automatically extend a business insurance policy to include business equipment at the home of employees, plus of course Employers' Liability protection. 
  • A more relaxed approach towards unoccupancy, should you decide to close your business premises temporarily due to the COVID-19 outbreak. Whilst you will still need to observe the usual kind of precautions for keeping the property secure, most insurers are now agreeing to no reduction in policy cover, and no increase in excess or premiums. 

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