Coronavirus (COVID-19) and your Business Insurance
In light of the recent outbreak we, like most UK businesses, have been challenged to provide solutions to many new questions that we would not normally anticipate.
The advice from the UK Government and Public Health England is to stay at home and only to go out when absolutely necessary.
The closure of business premises can result in an instant reduction in revenue, temporary lay-off of staff and ultimately a loss of income.
It is important however to understand the implications of the decisions you make now in respect of your insurance policy and how it might affect you in the short and long term.
We have produced the below FAQs to try and answer some of the questions we have had and how they may help you and your business survive this difficult period.
I am paying monthly by direct debit, can I/should I, stop paying?
No, you should not stop paying monthly direct debit as this can affect your cover and any future claim that you make. If you fall into arrears, you could also find your credit rating being adversely affected making it more difficult for you to arrange insurance in the future, as well as other issues.
Have you checked to see if you can take advantage of the support which is available from the UK Government during the Coronavirus crisis? In most cases this should help you to keep the insurance cover you need in place. However, if you are still facing short term challenges in relation to payment of your premium please contact us on 0345 504 0353 or email firstname.lastname@example.org.
Should I just cancel my policy?
In almost all circumstances our advice would be: Do not cancel your insurance policy.
- Your assets/belongings still need cover while not in use. Depending on the type of policy you have that will include theft, fire, flood, storm and malicious damage/vandalism. And liability to others, including employees if you have them.
- Most commercial or business insurance policies will not allow a proportionate return premium if you cancel your policy. It’s unlikely you will receive any return premium at all, especially if you have already made a claim, so not only will you be liable for the premium you will not have the benefit of the cover. You will also incur cancellation charges.
- When the current restrictions are lifted if you have cancelled in haste you will face the inconvenience of having to rearrange cover – maybe very quickly. You run the risk of needing to return to ‘normal’ quickly and not having the cover you need.
- By interrupting the cover you will have to re-enter the market as a ‘new’ customer at some point in the near future. There is no guarantee that you will secure the same terms and premium that you are currently benefitting from.
- If there is outstanding loan finance on any of your insured assets it is more than likely the lender will require you to maintain full cover in force in order to protect their interest in the assets concerned. This is usually a contractual obligation for asset finance.
- Our firm advice is that the benefits of staying covered far outweigh the relatively small and short term gains you might make by cancelling your policy. If your reason for cancelling is primarily linked to your ability to pay the premium please contact us as we can provide options to manage your payments while keeping the cover in force.
What about the cover I’m not using due to the fact that I’m not trading at the moment?
This is a valid point and one that we are conscious is affecting many thousands of businesses at present.
Firstly, your policy is still ‘live’ and therefore should an incident occur whereby you needed to make a claim, your insurer would still handle your claim in the normal way.
Secondly, the insurance industry is working hard to make changes to policies so that they can reflect the current extraordinary circumstances facing their commercial customers.
It’s a complex and unprecedented situation and insurers are carefully considering how best to make those amendments.
We will of course keep you updated but rest assured that as your broker, we are working hard with our insurers to come up with innovative solutions.
Will my business interruption cover me for my loss of profit?
The standard Business Interruption (BI) cover within a commercial insurance policy only responds when an insured peril has been activated in your insurance policy. For example, a fire or flood could mean an interruption to your income.
There are extensions to BI that would cover you in an event where a Government authority or other body restricted your access to your business premises however these extensions specifically exclude any action taken in controlling, preventing or suppressing the spread of any disease.