Your Insurance and Covid-19

March 13, 2020

Dear Valued Clients,

In the current times of high uncertainty and anxiety in local and global markets due to the increasing impact of the Covid-19, it’s very difficult to work out what to do first to ensure the continuity of businesses and livelihoods.

The potential closures of business premises and the prospect of periods of imposed quarantine for large numbers of people/staff are beginning to cause great concern amongst business owners. Every business out there (including our own!) is trying to work out what impact there might be from Covid-19 and plan for it.

We are fielding an increasing number of enquiries from clients regarding an Insurance cover for business closures and lost revenue or downtime. In the majority of cases, your business insurance pack will have a Business Interruption cover. If you have taken this optional cover out, this is the section that will be relied upon in the event of interruption to your business.

 

Q: Is my business covered if I have to close due to Covid-19?

It is really hard to give any sort of concrete answer to this question as every insurer and policy wording is different and we’re not getting much in the way of concise answers from the industry as to if and how policies might respond to interruption from Covid-19.

If you have a business interruption cover in your policy, these traditionally require property damage from an insured peril (i.e. fire for example) to trigger the business interruption section and we’re struggling to work out how this would relate to closures because of Covid-19.

There is however often an additional benefit to the business interruption section (in the majority of insurers wordings) that provides cover for an ordered closure (by a competent government, public or statutory authority) due to infectious disease, where there has been an outbreak within a 20km radius of the business premises, however (because of what is advised above) we’re not able to advise at this point if this additional benefit will operate without the property damage trigger.

We are seeking clarity from individual insurers and keeping a close ear and eye on the industry bodies who are working hard to keep everyone up to speed, however at this stage it’s a bit of a wait and see scenario.

In the interim, we believe there are numerous ways you can navigate the coming weeks and months to try and manage and lessen the potential impact on your business;

  1. Have a disaster scenario plan – ensure you go through a scenario planning process as soon as possible to highlight what could happen in low (already there for many businesses), medium and high severity disaster scenarios, the market trigger points and strategies to implement in these scenarios.
  2. Be alert but not alarmed – panic will not help you, your team, your customers or your business. While decisive actions need to be taken, taking them too early or too late can have negative consequences.
  3. Stay informed and think outside the box – Speak to your insurance broker and accountant, discuss supply chain options, adapt cash-flow projections, review policies and procedures, check if future meetings can be taken remotely, explore unnecessary travel reduction options to certain destinations, check the ability with your IT team to allow your team to work from home if required. Staying alert, listening to trusted media commentators and government bodies will guide thinking and be ready to make those tough decisions when and if required quickly.

The Coronavirus is a very severe issue impacting the world and there is no doubt it will have a negative impact on many if not most globally. However as always there are clever people working quickly on a solution that we would hope within 3-6 months will see communities and businesses start to return to business as usual as vaccines are developed (and distributed to those with a critical need) and people / businesses continue to take measures to reduce risks such as covered here: https://www.health.gov.au/health-topics/novel-coronavirus-2019-ncov

Remingtons is putting in place its own contingency plan that will allow all staff to work remotely if our office is required to close. There will be no disruption to clients if a closure is effected, with all staff available on a business-as-usual basis.

As always, please get in touch with your Account Executive or support team at Remingtons should you require further information or assistance.