Reopening guidance for museums published by the National Museum Directors’ Council, in conjunction with other prominent parties, it is welcome news that museums in England can reopen from 04 July, with other parts of the UK to follow shortly afterwards. The Association of Independent Museums (AIM) and the museum Development Network have produced a helpful checklist for reopening considerations, and within this article we will convey some insurance consideration which will complement the approach to steps 2 and 3 in particular – assess risk and financial viability. In our last blog, we provided commentary on the suggested approach to risk assessments and decision making rationale for reopening, we now concentrate on looking further forward.
Step 2 – Assess risk
As part of the updated risk assessment, social distancing measures need to be in place for staff, volunteers and of course visitors. If it remains at 2m, or even reduced to 1m, it may not be viable for many of the smaller museums to open in the near term – there simply isn’t the space, meaning it is likely the museum will be unoccupied for an extended period of time. From the start of lockdown, insurers in the main have waived their usual unoccupancy terms – namely, they have not restricted the cover provided for being closed, nor have they enforced the conditions that would apply to premises not being used, such as increased inspections and utilities turned off. This stance is now being revisited and insurers are looking to apply standard policy terms and conditions.
It is NOW you should be speaking with your insurance provider to outline the museum’s plans, to ensure you are aware of any restrictions that may apply or additional obligations. We would expect insurers to be accommodating if you detail your approach to reopening, including facilities management and on site presence, but communication is paramount. If you continue to be closed and insurers are not aware of your plans, they can legitimately apply their standard policy terms without consultation, which may result in some cover being removed, perhaps leaving you with little more than fire cover.
Step 3 – Financial viability
On the management side, the board of directors or trustees are also under the spotlight, as the financial pressures mount. Their personal accountability is insured through Directors and Officers/Trustees Liability insurance. Ordinarily, this insurance is done through assumptions on the financial position and processes of the museum, via a statement of fact. The reality is that some museums are now struggling financially, and there needs to be serious discussions as to how to maintain financial viability.
Museums with higher overheads and little prospect of generating income in the near term are more likely to face difficult decisions, or even the real risk of collapse, and this increases the likelihood of those managing the museum being asked questions about their approach and decision making – which in turn leads to an increase in likelihood of claims being brought. You should expect insurers who provide this cover to ask more questions about current and forecasted financial impact, debt and liquidity issues and changing activities (including business continuity planning) as well as staffing restructures and redundancies.
The insurance industry is going through change, which will undoubtedly impact your insurance renewal. As part of your overall impact assessment you should now be looking to get a second opinion on your insurances including what the museum has covered, and to what extent, as well as a thorough price review.