COVID-19 Insights | Business interruption insurance

Home / Forensic Accounting / COVID-19 Insights | Business interruption insurance

Manage.
Mitigate.
Move Forward.

By Natasha Milne

Natasha Milne

There has been a great deal of commentary in the news about the effects of Coronoavirus on businesses, and whether these disturbances (such as event cancellations, forced closures of premises, and impacts on suppliers’ premises located overseas) are covered by business insurance policies.

The usual avenue for making a claim following a business interruption event is via an Insurance Policy. The Business Interruption claim can only occur if it results from a claim for material (i.e. physical) damage. Physical damage may include closure or evacuation of a premises upon infectious or contagious disease manifested by any person whilst at the business premises. Where there is no material / physical damage and loss, a business interruption claim is not available.

Each insurance policy details the definitions of specific coverage inclusions and exclusions, applicable to the insured business. It is important to review individual policy details.

A common exclusion in business interruption policies is ‘any disease notifiable under the Quarantine Act’. The Coronoavirus has been listed under the Quarantine Act since the end of January 2020.

It is vital to understand the Policy. In the event a claim can be made, the insured business needs to ensure they:

  • Document their loss and keep supporting records; and
  • Take steps to mitigate the loss, including using due diligence and doing all things reasonably practicable to minimise any interruption of or interference with the business, to avoid or diminish the loss.

Coverage limits are detailed in the Policy schedule. These coverage amounts should be regularly reviewed, to ensure the business is adequately covered. Where a business in underinsured, the Insurer may reduce the amount they pay in the event of a claim. In the event a business owner makes a conscious decision to underinsure to save on insurance costs, it is important to understand the consequences and impacts on a claim.

Want to know more?

If you would like to find out more about how this could impact  your business, please contact Natasha Milne, our Forensic Services Director, for assistance.

An Important Message

While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents.  Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.

 

 

Related Posts