INSURANCE… and getting your head around what you need to consider and do during COVID-19.
As we are all aware we are currently in unprecedented times and the impact of COVID-19 is being felt in every sector – retail, services, manufacturing and finance. The ripple effect of this virus is far reaching, and there appears to be no escaping the inevitability that it is getting closer and closer to our own businesses and localities. Obviously our primary concern will always be for our families, our employees and our clients, and for the welfare of everyone around us.
These are busy times and there is a lot for the business owner to manage and consider. As business owners we also have to be acutely aware of the impact on our business, and will it survive? HABIC is here for its members and for all you working in the Hair, Beauty and Spa industry! We appreciate that you have a lot to contend with and we are doing our utmost to keep you informed and supplied with important and relevant information and resources.
Today we are focusing on INSURANCE.
It can be a complicated issue to get your head around, but HABIC has teamed up with Brian Mullins Insurance Brokers to bring you this guide as we manage our businesses through this challenging time. Brian Mullins is a member of the HABIC Executive Council and his company provides insurance policies that are tailor-made for the Irish Hair and Beauty Industry.
We have broken down this content into concise digestible topics. Below you will find information on the following;
- Business Interruption Cover
- Unattended Properties
- Employers Liability under Commercial Insurance Policies arising from the ongoing impact of COVID-19
Business Interruption Cover
COVID-19 and the implications for your business – is there any cover under your insurance? And if not, why not?
Under standard policies, the Business Interruption section does not include forced closure by authorities. Such policies are intended to respond to physical damage at the property which results in the business being unable to trade as normal. Some Business Interruption insurance policies, however, may include cover in relation to infectious disease and this is where the bulk of policyholder queries arise.
Insurers will no doubt make the case that the intent of this infectious disease cover is to indemnify against closure of a business premises by a public authority arising from an infectious disease emanating from the premises itself (or local to the premises), and not to the effects of a global pandemic. However, there are many different insurers operating within the Irish market and each will have their own policy wordings and some may have an exposure in the legal interpretation of their wordings.
Owens McCarthy recently published their own report and examination as to how the insurance policies offered by the leading insurance companies will react to claims for Business Interruption as a result of COVID-19. Some key points raised in their report are as follows;
- Not every policy includes an extension for Business Interruption cover and even fewer then carry a further additional extension to include cover for losses arising out of ‘infectious’ or ‘notifiable’ disease. On the absence of such extensions, there will be no basis for a claim to be made.
- In other cases, your policy cover may be based on a specified list of diseases and as COVID-19 is a new disease it is very unlikely to be listed. The outcome again is that there will be deemed to be no cover in place.
- A policy may provide an extension under the business interruption section for ‘notifiable’ or ‘infectious’ diseases. However, for a claim to be successful there must be proof that an outbreak occurred at the premises – and that the closure is because of this occurrence. If this proof cannot be provided then the losses will not be covered.
As this is all unprecedented, it still has a long way to go and representations are being made by insurance brokers and their representative bodies and industries to the government to engage with the insurers. However as this COVID-19 has been declared a global pandemic it is very unlikely that any insurance policy will be able to meet with the demands of the deluge of claims it would face should they be willing to move on their policy wordings.
In every case, the policyholder should react to the current crisis in the manner of a ‘prudent insured person or business’. They should aim to reduce their own loss, and notify their insurance broker/company to determine what the position is with regards to cover under their own policy.
The other big exposure that businesses need to be aware of is the continuing requirement on them to notify their insurance company of any material change to the business. If you have ceased trading, whether voluntarily or as a result of an instruction from the State, and your business premises is now vacant, then this is a material fact and you will need to notify your insurance company accordingly.
In most cases we have found that insurers are willing to maintain full policy cover providing that you take the following steps;
- Keep all gas and water mains supplies disconnected.
- Keep all electricity mains supplies disconnected (unless to supply an intruder or fire alarm system).
- Keep all windows and shutters securely locked.
- Check on the premises at least weekly (both internally and externally) if permissible.
- Remove all trade waste.
Again, each insurer will adopt their own approach and it is vital that you inform your broker / insurer and not assume that cover is in order.
In the case of some businesses, employees are now working from home – admin, accounting, marketing, etc. Most insurers have confirmed that the policy cover will extend to cover their activities away from the business premises, but again, we advise that you check the position regarding cover under your own policy with your broker / insurer.