The What, When & How of Business Interruption Insurance

Understandably, businesses across the UK are trying to understand whether they are covered for business interruption losses due to COVID-19, our expert team can help.

From what we have seen so far, unfortunately, many businesses will not be covered. However, some may be but are not aware of it – there are two types of policy extensions to your business interruption cover that can potentially cover you for the Coronavirus pandemic:

• Infectious Disease Extension
• Denial of Access Extension (non-damage)

For more information, read more on COVID-19 and business interruption insurance claims. 

In this time of uncertainty, we are more than happy to check your business’ insurance policy wording free of charge and without obligation to see if you are covered and entitled to make a business interruption insurance claim.

The most challenging part of quantifying business interruption claims is proving how you would have fared had the incident not occurred.

This involves reviewing your company’s historic performance and anything else that could have influenced trade. The performance of the market in your industry needs to be examined, as do factors such as a new competitor emerging, or an existing one disappearing.

What is business interruption insurance?

It is a type of insurance designed to protect businesses from any financial loss due to any damage to the business premises (from a fire, flood, storm etc.). So while buildings insurance will only cover you in the event of physical damage to the property (or contents within depending on the type of insurance that you have), business interruption insurance will cover any potential financial loss of income that the business would have received had conditions been normal. Depending on the severity of damage to the premises, this could mean the difference between continuing business as normal, and going under.

Who needs it?

Above anything, this depends on how much physical damage to the business premises or its physical assets would affect the smooth running of your business operations and for how long?

A sole trading digital marketing freelancer who only needs a laptop and internet connection to work would suffer very little income loss as they’d still be able to trade with very little interruption – they’d just need to find a temporary premises and possibly a new machine. Conversely, businesses holding a lot of stock or equipment for trade or that is necessary for the business to function might be very exposed should any of this equipment be destroyed in a fire.

Business interruption insurance is not mandatory by law – this means that it is entirely up to the business owner to assess the risk of not having it, and whether a potential disaster to the business premises or assets would have a substantial impact on its ability to trade and continue as normal. If, as in the case of the freelancer, the answer is no – business interruption insurance might be a bit excessive. If however, the answer is yes, we’d highly recommend getting a policy in place to protect your business and employees.

Why Use Us

We have the most experienced team of business interruption insurance experts in the UK who specialise in large and complex claims. This includes chartered accountants who are based in house.

Although business interruption claims are not simple, the loss adjusters and forensic accountants appointed by insurers often present them in a way that makes them more complex. Our team has the skills and knowledge necessary to work through such complexities.

We will take an active role in reducing the impact the incident has on your business, so you can recover as soon as possible.

How We Can Help You

Business interruption insurance claims often have grey areas which can make it hard to get proper compensation.

We will use our knowledge to spot opportunities you are likely to miss and will go beyond helping you recover the losses you have suffered. We will give a true account of the losses you have suffered and present the facts of your case in a way that maximises the opportunities available under the terms of the policy.

We will identify the important issues which need focusing on and will advise you on mitigating any further losses.

In addition to this, our services also include:

• Helping you locate appropriate temporary premises.
• Helping you look at alternative sub-contracting arrangements.
• Recommending temporary options for machinery in circumstances where permanent replacements have a long lead time.

Communicating with Staff and Stakeholders

One of the most urgent problems policyholders face following a major incident is communicating with staff who want to know their jobs are safe and they will still be paid. We will help you respond to such questions, which don’t always have a straightforward answer. We will help you reassure employees about the future of your business without compromising your position with your insurers.

Likewise, we can attend meetings with bankers and any funders who are worried about the security of their investment in your business. They will want to know the likelihood of a successful outcome from your insurance claim. We can also advise you on how to deal with the press, including what statements should be made by employees and other stakeholders.