Hayes Parsons Insurance Brokers has prepared the following Frequently Asked Questions, containing the questions we have been posed since the outbreak of the coronavirus pandemic. Unfortunately, insurers have chosen to release updates on their policies individually rather than as a group or via the Association of British Insurers (ABI), and at different times, with some reacting very quickly and others less so. For this reason our communications have been kept generic in nature. This information does not replace bespoke, individual advice and we would encourage you to contact us to discuss your individual questions and the implications on your cover.
I have Business Interruption insurance, am I covered?
The vast majority of organisations do not have cover for coronavirus under their Business Interruption insurance. Not all insurance policies are drafted clearly, and the best way for us to confirm whether you are covered or not is to contact us. Contrary to what you may read on social media or even via trusted news sources, the change in the Government’s stance to “lockdown” will have no effect on the majority of insurance policies. Some insurance policies do have an element of cover, but this is likely to be limited and is mostly the consequence of poor policy drafting rather than a specific decision to provide insurance cover.
Owing to the ongoing confusion around some of the more poorly drafted policy wordings and the interpretation of some policies by insurers who deny there is cover when this is questionable at best, the Financial Conduct Authority (FCA) has now decided to test the insurer’s arguments in court, to create a common law and transparent approach to the key arguments. We would expect this to only impact a small number of policyholders, but we welcome the FCA’s approach and hope this work will be completed urgently.
You have confirmed my Business Interruption insurance does not cover coronavirus, why doesn’t it?
A global pandemic of this nature is not viewed as insurable, as insurers would not be able to meet the liabilities in covering the lost turnover of the whole country. Insurance is designed to create a pot of money by the many, for the benefit of the few in making claims. Many insurance policies cover certain specified infectious diseases, but the list is of those that are likely to cause local disruption, and not disruption on a national scale and over many months. Even if there was insurance cover in place, the insurers would not be able to meet the many hundreds of billions of pounds that will be required and you would not be able to afford the premium being offered. The only organisation with the ability to provide support in the event of a global pandemic is the Government.
The future of pandemic insurance is being discussed between the Government and the insurance industry and we will keep close to these discussions and provide more clarity when it is available.
What happens if my building becomes unoccupied during this period?
Insurers’ definition of unoccupied differs from that which we would normally consider as unoccupied. Insurers will consider a building unoccupied if it is not visited for a certain period of time, normally around 30 days (if you are a school, this is amended for holiday periods but not during term time), and often even if only part of a building is unoccupied. After this period cover can be restricted, often automatically, and certain conditions are put in place to manage the increased risk. Most (not all) insurers have confirmed that they will not consider a building unoccupied during the lockdown period if you or a tenant are unable to go to the property and therefore conditions for unoccupancy will not apply. Please note that buildings unoccupied prior to the lockdown will still be considered unoccupied, and therefore any unoccupancy conditions will apply, as will restrictions in cover. Particularly if you have a large, unoccupied site you may have onerous conditions on your policy around site security and key holders. It is essential if you are unable to comply with the conditions, or services are withdrawn, that you contact us immediately and we will seek to amend these conditions.
The same comment is applicable if you are a marina or boatyard.
I have stopped regular maintenance of my buildings. Will that invalidate my buildings insurance?
There is likely to be a “reasonable care” condition within your policy, requiring you to maintain your buildings and take reasonable care. During the lockdown period, it is likely insurers will take a pragmatic approach to this condition. However, any urgent repairs which will effect the security of the premises or people’s health and safety should still be undertaken, and any more significant issues should be referred to us.
I am having building works completed, and the contractors have now come off site. What should I do?
You will normally have a contract in place with the contractors, which specifies the insurance and risk management responsibilities of each party, and you should consider this document to understand what you are accountable for. If the contractors are no longer attending site, you should notify us as they may now consider the property unoccupied, having not considered it so before. You should ensure that the site is clear of any items which could cause an accident and are blocking access routes and for waste to be cleared away, plant secured or returned to the hirer and for the building to be similarly secure and watertight. If this is not the case, you may want to consider temporary coverings to protect the building from inclement weather. Where possible, we recommend you consider following the normal unoccupancy conditions of the policy, including turning off utilities.
I am a contractor and have come off site, what should I do?
The risk management advice in the previous question remains accurate. In terms of insurance, you are likely to have a condition within the policy requiring you to notify insurers if works cease for a certain period of time. As the Government have loosely allowed construction work to continue, should you have ceased operations it is important you notify us so we make your insurers aware.
If you are currently hiring items of plant, you should check the hire conditions, as you may be able to return the plant to the hirer and obtain a credit. If you have items you have hired out, you should contact the company hiring your equipment, as you may need to collect this equipment and store it securely. You should check whether your policy restricts the amount of plant in any one location, and allows for plant off hire to be left on construction sites in which works have ceased. If there is not the right cover in place, we should be notified to amend the cover or else you should plan for the collection of plant to comply with the policy.
I have items of plant which are required to have a statutory inspection, should I continue with this inspection?
There has been no change at this point with the relevant inspection legislation, meaning items must still be inspected and a certificate issued. If this is not possible, either because you are not on site, or because the inspection company are unable to visit, you should ensure the item is taken out of service and not used until the inspection has taken place in the future.
Do you recommend any actions I should take to secure my building during this period?
Yes, there are several actions you can take to further secure your building during the lockdown as discussed above. These include turning off the utilities, ensuring security lights are functioning and alarms are set, and organising regular inspections where possible. A full guide on what to do to secure your building can be found here.
If I continue working on site and I want to take my child to work, am I insured?
Yes, but insurers will want to see some risk management procedures, such as:
a) Risk assessing and ensuring the site is safe for the child to be inb) Following Government guidelines around self-isolation and third party visitors
What cover do I have for working from home?
You do not need to arrange for additional liability insurance providing you do not have business visitors visiting your home regularly. You may however have significant amounts of organisation owned computers and contents at home, and you may need to inform insurers of this to ensure cover extends outside of your normal place of work. Some insurers have now agreed to extend cover to employee’s/volunteers homes without charge or the need to notify them, for the period of the pandemic.
I am a landlord. What should I be considering during this period?
You should make contact with your tenants and if they are unable to access their premises during this period, you should check whether your insurer considers this unoccupied. Even if they do not, it would be helpful where possible for the tenant to follow the normal unoccupancy conditions.
As with businesses, with regret there is no loss of rent cover under the majority of insurance policies for the pandemic.
I have travel insurance. Am I insured for cancellation of international trips?
Where the government has advised you not to travel, you can cancel your trip and make a claim for any part of the costs which are not recoverable, providing you made the booking before you reasonably considered cancellation was a possibility. If the trip is in advance and it is not currently advised not to travel, you will not yet be able to make a claim. Cancellation cover due to coronavirus will not be available in the whole insurance market for new trips from now on and at any time in the future.
I have read that there is an increase in cyber attacks following people moving to remote working
Unfortunately there is evidence of a significant increase in cyber attacks. Existing cyber insurance should cover these attacks, subject to normal terms and conditions of the policy, and if you wish to discuss cyber insurance please get in touch. CFC have created a guide for working from home, which can be found here.
I am considering reducing the number of staff I employ; do I need to tell insurers?
If you have Directors & Officers/Employment Practices Liability insurance or Legal Expenses, it will be a condition of these policies to notify insurers prior to certain HR actions including redundancy. We strongly recommend the insurers advice helpline is contacted prior to any actions, or please contact us to discuss further. Most insurers are being more flexible around furlough, but would expect you to notify them at renewal of the actions you have taken to furlough employees.
If your insurance policy comes with an employment helpline, you may want to make use of this helpline during the furlough process.
I have a motor vehicle due for MOT but am unable to take it to the garage during the lockdown period. Am I still insured?
The Government has extended the MOT expiry date for six months for any vehicle due to expire on or after 30 March 2020. Any vehicles due for an MOT before this date should have been tested as usual. This extension is for vehicles, motorcycles and light vans and there are different rules for larger vehicles which can be found on the DVLA website.
Do you anticipate insurance premiums increasing?
Even before the coronavirus pandemic, insurance premiums have been increasing, with the financial results of insurers mostly deteriorating in the last couple of years. Whilst most organisations will be unable to make a claim, the ABI still estimate the costs to insurers to be over £1bn in claims, and this is before you consider lost and reduced premiums as cover is cancelled or slimmed down. You should therefore budget for insurance to increase in the coming months. At this stage it is not possible to estimate by how much, but it is still the case that the UK has one of the most competitive insurance markets in the world, which should help keep increases down.
Can I freeze my insurance policy during the lockdown period?
You are unable to freeze your insurance policy as you will still require some cover during this period, for example insuring the buildings, contents and any collections, your liabilities and so forth. We would strongly recommend you do not cancel your insurance policy, for this same reason. However, there are several ways you can reduce your premium, when cash flow will be very tight, and we can also provide direct debit facilities to allow you to spread the premium over the life of the policy. As each organisation’s view of risk will differ, we have not detailed specific advice here on how to reduce your premiums, and would recommend you discuss this individually with us.
If I am found to be legally liable to someone for catching coronavirus, am I covered by my insurance policy?
It will not be possible for insurers to exclude cover under the Employers’ Liability section of any policy should you be legally liable to someone employed by you for catching coronavirus. Your Employers’ Liability policy will cover both defence costs and any awards made against you. Most insurance policies will cover you for third parties including pupils and clients for any similar legal liability claims. However, a number of insurers are now excluding claims brought against you for coronavirus from their Public Liability policies, and we believe the majority of insurers will follow suit. We strongly disagree with this stance but we are likely to have little choice but to accept this exclusion because it is going to become commonplace. Insurers will not be able to exclude cover retrospectively.
I have seen that some insurers are beginning to provide refunds for me not using my car during the lockdown period. Will my commercial policy do likewise?
It is possible that your insurer will do this, but so far only personal insurance policies have allowed for a return of premium for the reduced risk of claims during the lockdown period. In order to obtain a reduced period on your commercial motor policy (and indeed on any pleasure craft or commercial hull policy) we can change your cover to “laid up”. To do this with your vehicles, the majority of insurers are requiring you first “SORN” the relevant vehicles with the DVLA. You should then contact us to arrange to amend the cover with the insurer. Please note during the laid up period, you must not use your vehicle or boat, or there will not be appropriate insurance cover in place.
I don’t agree with my insurer’s decision on my coronavirus related claim. What are my options?
We will work closely with you to make your claim, and in the event the insurer rejects your claim and you wish to pursue the claim further, we will help you with the next stages. There are several options open to you, including for those eligible the Financial Ombudsman Service (FOS), arbitration, group litigation, negotiation and individual litigation. Given recent information that the FCA is seeking a ruling on some disputed coverage points, it may be worth awaiting the outcome of this ruling before deciding on next steps. It is important to note that any referral to the FOS must be made within 6 months of the insurer’s rejection of the claim.