Most pubs not covered for coronavirus

Concerns have been raised over publicans’ entitlement to a payout for loss of trade due to coronavirus, especially now Boris Johnson has advised the public to physically distance themselves from locations, such as pubs, but not actively closing them.

At a press conference yesterday (17 March), the Chancellor of the Exchequer Rishi Sunak outlined additional financial support for businesses, on top of the £1.2bn he set out in his 11 March Budget, which included a business rates holiday for all pubs for the next 12 months.

On top of this, Rishi Sunak also highlighted how pubs that have insurance policies that cover pandemics will be able to claim against their policy. 

In response to this, ABI announced: "The Chancellor's statement today is consistent with our statement where we said, in the event businesses have the right cover, this type of notification could help make a claim.

“But, as the Chancellor acknowledged, the vast majority won’t have purchased extended cover and this remains unchanged.”

Slap in the face​

Yesterday, ABI stated that ​irrespective of whether or not the Government orders closure of a business, the vast majority of firms won’t have purchased cover that will enable them to claim on their insurance to compensate for their business being closed by the coronavirus.  

An ABI spokesperson continued: “Standard business interruption cover – the type the majority of businesses purchase – does not include forced closure by authorities because it is intended to respond to physical damage at the property, which results in the business being unable to continue to trade."

And while a lot of pubs are still open for business, ABI has confirmed that this is the same for any loss of trade due to coronavirus. 

UKHospitality chief executive Kate Nicholls said: “The insurance industry has abdicated responsibility for the thousands of hospitality venues that have bought policies in good faith and who, through no fault of their own, are unable to trade.

"Removing that safety net impacts millions of workers who depend on them for their livelihood. This is a slap in the face but perhaps it will be a wake-up call to Government that there is no one else who can help save those jobs.”

The ABI spokesperson continued: “A small minority of typically larger firms might have purchased an extension to their cover for closure due to any infectious disease.

“In this instance, an enforced closure could help them make the claim but this will depend on the precise nature of the cover they have purchased so they should check with their insurer or broker to see if they are covered.” 

Fully aligned​

A story covered by The Morning Advertiser​ on 16 March​ announced Ei Group’s tenants were some of those who aren’t covered by Covid-19 with its insurer, Zurich, and should seek cover elsewhere.

A Zurich spokesperson said: “Zurich’s cover for business interruption is fully aligned with the rest of the insurance market. We will always respond whenever one of our policies is triggered and are continuing to support our customers on a case-by-case basis.” 

Zurich also reiterated the issues put forward by ABI that other insurers across the industry, under most property/business interruption policies in use in the UK market that cover for the effects of the Covid-19 pandemic, is very limited. 

According to Zurich, where business interruption policies do provide an extension in cover for notifiable diseases, these generally include a list of individually named diseases (eg, smallpox). Insurers use a precise approach of naming individual diseases because they are unable to model risks they cannot assess. 

However, some policy wordings do not have a specific list of individually named diseases so Covid-19 may be covered in certain instances.

Preparing plans 

ABI also stated a small number of businesses may have cover in place that will specifically provide for business interruption arising from notifiable diseases, however this type of extension is not commonly included as standard. 

Another statement released by ABI regarding coronavirus and commercial insurance, on 4 March, said: "Standard business insurance policies are designed and priced to cover standard risks and are, therefore, unlikely to provide cover for the effects of global pandemics like Covid-19.”

ABI explained there is unlikely to be a new policy cover available for coronavirus currently as insurers insure against risk, not certainties.

However, as previously reported, the Chancellor is preparing to unveil plans to help the economy and businesses and individuals affected by the coronavirus pandemic.

Rishi Sunak will take the Government’s daily Covid-19 news conference in Downing Street later and will use the televised address to announce the new measures.