Coronavirus: Insurance policies for SMEs

Coronavirus (COVID-19) is the ultimate unforeseen event that insurance policies were supposed to be designed for. However, what your insurance might cover you for during the pandemic can be unclear. Understanding what you can claim for versus what you can’t is more important than ever. 

The most likely way to make an insurance claim for loss of business would be under a “business interruption” policy. However, the UK’s insurance industry is advising that most claims under this type of policy won’t be possible in relation to coronavirus at present.

It’s worth checking your paperwork and speaking to your insurer though. And even if you can’t make a claim, the government has announced a wide range of other support measures for businesses which you can read about here.

To cut through the jargon and help you understand how insurance will work during the outbreak, we’ve rounded up the latest advice and best guides here. It’s also important to remember that if you are still trading, certain types of insurance policies are required by law.

Got 2 minutes? Check out our 5 things you can do right now

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5 things you can do (right now) on your insurance policies

(1) Review what insurance you have in place, especially business interruption cover

Small business policies cover a wide range of risks and catch-all policies are common. These tend to cover your company’s contents, accidental damage, public liability, legal expenses and business interruption. This last one is vital to check. Business interruption covers for loss of income during periods when you can’t carry out business as usual due to an unexpected event. It may also compensate for increased running costs and/or shortfall in profits as a result. Dig out your paperwork and check whether your policy has business interruption. It doesn’t mean you’re covered, but it is the first step.

(2) Check whether “notifiable diseases” are covered under your business interruption policy

Coronavirus is classified as a notifiable disease by the UK government (and also the Scottish government). If your insurance policy includes business interruption cover then you need to check whether notifiable diseases are listed as an interruption. Typically, this isn’t always included, but if it is then ask your insurance broker or insurance company whether coronavirus is included in their list of notifiable viruses.

(3) Ask if you can add coronavirus to business interruption

If you have business interruption cover and it includes a notifiable diseases clause, then it’s possible you may be able to add a specific coronavirus clause. There’s no guarantee your insurer will let you, and it may depend on the current status of your business. If they say yes, you may be required to pay a higher insurance premium as a result, so be prepared for this.

(4) Keep up to date with advice on how coronavirus affects your cover

The Association of British Insurers (the ABI) is the UK’s trade association for insurance. The ABI’s website posts regular updates on how policies are being interpreted for coronavirus. Unfortunately, they currently believe “only a small minority of businesses choose to buy cover that includes local closure due to an infectious disease”. They add that “an even smaller number will have cover enabling a claim for the presence or impact of coronavirus”. However, the situation may change in the future, so keep checking back.

(5) Remember that you still need to hold some types of insurance by law

Even during this outbreak, some types of business insurance are still required by law, so don’t go cancelling your premiums. If you are an employer, you’re legally required to have employers’ liability insurance. This covers the cost of compensating employees who are injured or become ill through workplace activities. It also covers the cost of associated legal fees. If your business uses a vehicle, either for travel or to deliver and pick up products, you will still need motor insurance. If your employees use these vehicles, their names need to be on the policy too.

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Resource roundup

SME insurance: where to get the detail on coronavirus claims

Lots of insurance companies, trade associations and other organisations are posting useful information. To save you time, we’ve produced a list of the best advice and information on this issue.

Want a step-by-step guide to whether your insurance might cover you for coronavirus?

The The Federation of Small Business (FSB) is collating and publishing information about all the help available to businesses. This includes a detailed description of how insurance policies work and especially how “business interruption” clauses will be interpreted. There’s also a good explainer of the current situation on business news site smallbusiness.co.uk and a short video explainer by Actus Insurance available.

Want to know the latest view from the insurance industry?

The The Association of British Insurers (ABI) is keeping a close eye on both government policy and the insurance industry’s response to coronavirus. They are posting updates about business insurance on a regular basis so it’s worth checking their site often. They also have a detailed Q&A about coronavirus business insurance.

Want to find an insurance broker to talk about your options?

The British Insurance Brokers Association (BIBA) is the official trade body for insurance brokers. If you want to speak to a new broker about adding coronavirus cover to your business interruption insurance policy, then use BIBA to find one. They also have a general guide to business insurance which may prove useful.

Want to know what the government is doing on this issue?

The government is keeping a list of all its business support policies on a central web page. If it announces any measures regarding insurance claims or policy types, they will appear here.

Want to know what employer liability insurance is and why you need it?

Even during the coronavirus outbreak, there are some types of insurance businesses need to hold. The most common is employer liability insurance, which covers accidents or illnesses suffered at work by your employees and associated legal fees. If you don’t take out a policy, you could be liable to be fined up to £2,500 a day.

Want to know about claims on business travel?

In just the same way people are making claims for cancelled holidays, if you have travel insurance it’s worth thinking about claims for cancelled business trips. Making a claim will depend on the destination of travel and whether the Foreign Office has issued guidance about it. Travel insurance policies taken out recently may also have had clauses inserted about coronavirus so check this.

Want a guide more generally to business insurance and how to buy it?

There’s a wide range of options and policy types for business insurance. Often, what you need – and what you don’t – depends on the type of business you are. This is especially important if you are thinking about pivoting your business during the coronavirus outbreak. For example, switching to takeaway rather than eat-in food might mean you start running a delivery service and therefore need a motor insurance policy. There’s another good guide by Money.co.uk as well.

Want to know what kind of insurance claims are being successfully made?

Consultants Iwoca have pulled together this useful article which highlights some of the claims that are being accepted in response to coronavirus. Law firm Wright Hassall has compiled a similar article too. It also reviews wider types of business insurance policies and whether you could consider making a claim against these.