The information contained in this bulletin is based on sources that we believe are reliable and should be understood as general risk management and insurance information only. It is not intended to be taken as advice with respect to any specific or individual situation and cannot be relied upon as such. If you wish to discuss your specific requirements, please do not hesitate to contact your usual Towergate Insurance Brokers advisor.
The various financial assistance schemes that have been brought in by the UK Government to support businesses and self-employed workers through the COVID-19 crisis have understandably caused some confusion around potential changes to insurance cover.
Here, we address some of the questions we have been frequently asked. This pandemic is impacting all sectors in an unprecedented way, but we are here to support you through this difficult time and commit to keeping this document as up to date as possible.
It is a topic that is moving at a very fast pace, so we can only commit to the information being correct at the time of issue. For specific questions in relation to your policy, please speak to your usual Towergate Insurance Brokers advisor.
Property Damage
Do I need to tell my insurer that my business premises are unoccupied?
Your policy will usually have an unoccupancy clause that typically states a premises can be unoccupied for around 30 days without the need to tell your insurer. However, some policies have a longer or shorter unoccupancy period so you should check your policy wording. Some Insurers have now agreed to extend this period, although this does vary from Insurer to Insurer. We are requesting that insurers apply flexibility on how long a property can remain unoccupied. If your property is likely to be unoccupied we recommend you speak to your usual Towergate Insurance Brokers advisor who will be able to advise what period applies to your policy.
How often should I check on my business premises from a security perspective?
Your insurer may have specific requirements attached to their unoccupancy cover, so it is important you check this. This is likely to depend on the security you have in place, such as alarms, CCTV and locks. Please ensure that you leave your premises secure and the normal protections you currently have in place continue to operate. If you are unsure, your Towergate Insurance Brokers advisor will be able to advise you on your personal circumstances.
Will my policy extend to cover company equipment, e.g. computers and electronic equipment, which employees would not ordinarily take home?
Not as standard, but some policies do automatically. Please speak to your usual contact who will advise you with clarity on your cover and amend your policy if required. You should advise employees that there are likely to be restrictions on transit in respect of unattended vehicles. You will have to ensure that all health and safety risk assessments are updated accordingly.
Business Interruption
Am I covered for loss of revenue / profit? Am I covered for inability of my supplier to provide services?
There are a number of elements to consider.
Damage
Business Interruption cover is based on a specified list of diseases and has been since the SARS outbreak in 2003.
Most policies exclude business interruption due to new and emerging diseases, like COVID-19. Policy wording clearly identifies the diseases Notifiable Disease insurer offer cover for and, in addition, highlights that new and emerging diseases like COVID-19 are not covered.
The current COVID-19 outbreak is therefore not covered under a significant majority of business interruption policies.
We are not aware of any policy which simply covers a loss of earnings resulting from pandemic.
Denial of Access
The UK Government advice seems to have caused some confusion.
Where a policy does cover the closure by the local authorities due to Notifiable Disease, the trigger for cover is typically an incident of that disease at the premises (in other words, the policyholder being unable to use the premises due to quarantine measures advised by the Medical Officer of Health of the Public Authority). We will however review each policy on a case-by-case basis.
Suppliers
The same caveats as above would operate for your supplier.
Prior to the UK Government’s forced closure of non-essential businesses, an insured premises in the vicinity of mine closed due to an outbreak of COVID-19. We were still able to trade, but it impacted our business and reduced our income and/or profit. Can we recover our losses under the policy because this nearby business closed?
Unfortunately, there is unlikely to be cover under your policy for this circumstance.
Prior to the Government’s forced closure of non-essential businesses, we decided to voluntarily shut our business to protect the welfare of our employees. Are we covered for this period of business interruption?
Unfortunately, there is unlikely to be cover under your policy for this circumstance.
One or more of our employees self-isolated or was admitted to hospital as a result of an actual or suspected contraction of COVID-19 before the UK Government lockdown of non-essential business. We decided to voluntarily shut our business. Are we covered for this period of disruption?
Unfortunately, there is unlikely to be cover under your policy for this circumstance.
We kept our business open for as long as possible, but experienced a reduction in custom and a subsequent loss of income/profit as a result of the Government’s social distancing advice relating to COVID-19. Are we covered for these financial losses?
Unfortunately, there is unlikely to be cover under your policy in these circumstances.
Please refer to the Business Interruption Continuity Planning Alert.
Employers Liability
Are my employees protected if they contract COVID-19 at work?
Liability cover provides protection for the policyholder against their legal liabilities to their employees or the public. This includes property damage and Bodily Injury; Bodily injury includes Illness (including resulting death). ‘Illness’ is not defined so could include legal liabilities incurred from COVID-19 in a situation where the insured has breached their duty of care.
For a breach of duty of care to be considered, the insured would need to be in contravention of any Government guidelines or advice regarding safety at work.
For example:
- by requesting an employee attend work to do a non-essential role
- not providing essential equipment or guidelines for adequate sanitation, if the above doesn’t apply
Advice on managing the health and safety of mobile workers.
Should I cancel my Employers Liability cover if I’ve put all my employees on furlough?
No - as employees on furlough are still paid by businesses (despite receiving Government support to cover 80% of their cost), our insurers have advised that Employers Liability cannot be cancelled. As salaries are taxed and subject to National Insurance contributions in the usual way, businesses continue to have the duty to comply with the Employers Liability (Compulsory Insurances) Act, meaning cover needs to remain in place.
Management Liability (D&O)
Are wrongful acts covered?
Management Liability cover is provided in the event a business Director commits a “Wrongful Act”. For this to be considered, they would have to show negligence in their actions that leads to a detriment suffered by either a third party or an employee.
Wrongful acts are split between those that cover the general duties and those for employment.
For general duties, our definition of “Wrongful Act” includes any breach of duty or negligent act, error or omission. COVID-19 related issues could be included under this cover.
For employment “Wrongful Acts”, our insurance coverage for “failure to adopt adequate workplace or employment policies and procedures” could lead to COVID-19 related issues being included under this cover.
This would automatically be covered under the core D&O cover and the insured would also be covered by the optional Employment Practices Liability section if selected.
D&O policies are on a ‘claims made basis’. This means that as soon as your policy is cancelled any claims which may be made against you as an individual or the Company, even if spurious, will not be defended and any valid claim will not be met by your insurers leaving you exposed.
If you do wish to cancel this, we would strongly recommend that you consider arranging what is called ‘run off’ cover for a period of time, (normally 1, 3, 6 or 10 years) dependant on the perceived exposure.
Marine Cargo
Will my cargo which is delayed, in the ordinary course of a journey covered?
Institute Cargo Clause A – in general terms the loss trigger is traditionally physical loss or damage therefore cover would not apply as per property damage policies.
We are working with insurers to ensure the standard period for cargo in the ordinary course of a journey 60 days after discharge.
Personal Insurances
How might this affect motor and household insurance?
All ABI members have agreed to adopt flexible motor and household cover in the wake of the coronavirus pandemic. The measures include flexibility for those having to work from home, to drive to work or use their cars for supporting the community.
In a statement it said: “If you are an office-based worker and need to work from home because of government advice or because you need to self-isolate, your home insurance cover will not be affected. If you have to drive to your workplace because of the impact of COVID-19, your insurance policy will not be affected. If you are using your own car for voluntary purposes to transport medicines or groceries to support others who are impacted by COVID-19, your cover will not be affected. You do not need to contact your insurer to update your documents or extend your cover.”
This extends to key workers, as listed by the UK government last week in relation to coronavirus.
View more information on home and personal motor insurance.
Renewals
What will future renewal look like? Will insurers be offering extensions on current renewal periods or offering auto-renewals?
At this time insurers are not accepting standard auto-extension or renewal endorsements. Whilst they understand, the desire to ensure continuity of cover for your clients, we do not believe short term extensions are in the overall interest of our respective businesses.
Both businesses are already under strain and this has the potential to create more work (rather than save time), especially as the COVID-19 issues are unlikely to be resolved quickly.
Under the current circumstances, will you be offering rate free renewals for claims-free business?
Insurers don’t believe that this is a sustainable move. Many sectors within the Commercial Lines market require a rate increase this year and there are several factors driving this i.e. increased claims costs, inflation and of course, the individual performance of the account. For more information, please see our recent article on market conditions.
Rest assured we at Towergate will do everything within our means to ensure you get the rates that are commensurate with your exposures.
We will continue to support you in these unprecedented times.
Motor Fleet
Will my insurers allow vehicles to be laid up?
Some insurers are offering ‘Vehicle Laid Up’ (VLU) cover where vehicles are being taken off the road due to a reduction in demand or usage. If you wish to enquire about this or other reductions in cover or use, please call your usual contact.
Can my cover be extended for a change of trade and therefore use?
Subject to our prior consent, we will aim to provide cover for any policyholders wishing to diversify into other activities (e.g. delivery of fast food, prescriptions, grocery shopping, parcels) to enable continued trade.
Other considerations
Should I reduce my wage declaration/forecast amount used to underwrite my policy if I put employees on furlough?
It is important that you talk to your usual Towergate Insurance Brokers advisor so they can give you the best advice for your individual situation if you are considering putting employees on furlough. While the Government-backed scheme pays 80% of employees’ wages while they are furloughed, you may still choose to pay them the remaining 20% of their salary yourself, in which case your wage roll would not be reduced, as you’d still be paying out 100%. If you are unable to do this, you could potentially temporarily reduce your wage roll by 20%, as the remaining 80% is still be paid as a formal wage.
Is my business at a higher risk of a cyber attack while my employees are remote working – should I think about cyber cover?
Unfortunately, it does appear that cybercriminals are exploiting the increased mandate of working from home and general confusion brought about by the new way of working. There are steps you can take to reduce your risk of a cyber or data attack but taking out a cyber policy gives you added peace of mind that you have protection in place should it happen, after all, you are much more likely to suffer a cyber loss than a fire loss. We have a range of cyber options available. Speak to your usual Towergate Insurance Brokers advisor for further advice.
Should I decrease my annual turnover amount used to underwrite my policy if I’ve been negatively impact by the crisis?
You may be asked your annual turnover in order to ensure you’re sufficiently covered, typically under your business interruption cover. We would usually review this with you at renewal of your policy, as we look a whole 12 months, rather than single months in isolation. It is worth noting that it would apply to future cover, so if you reduced it to take into account a reduced turnover this year, you may find yourself underinsured if, hopefully, the coronavirus crisis is not repeated and your turnover returns to normal next year. If your business has been affected positively by the situation and your turnover forecast is higher than expected, you should let us know so we can ensure you are not underinsured.
Are there any other changes I should let you know about?
In these unprecedented times, businesses are continually adapting in order to get through this situation by making big decisions to change the way they do business. If you have changed your activities in any way, are supplying different products or services than usual or have moved to offer online and virtual services where you didn’t before, you should speak to your usual Towergate Insurance Broker advisor. There may be no impact to your cover, but it is always worth checking to make sure you have all the protection you need in these challenging times. We are here to support you and help your business to continue where possible.
Further information
View answers to more questions
If you have financial concerns during this outbreak, the UK Government have announced a range of support for businesses which you may be able to benefit from.
The most up to date guidance relating to all aspects of COVID-19
For more information or for a full review of your insurance needs, please continue to contact your usual Towergate Insurance Brokers adviser or email TIB@towergate.co.uk.
