COVID-19 and Insurance Coverage For Businesses

On 11 March 2020, the World Health Organization officially characterized COVID-19 as a pandemic, raising the health emergency to its highest level. The situation appears ominous as the number of cases of the virus has increased exponentially globally, with about 114 countries affected. Currently, while the increase appears to be have slowed significantly in China, other countries are now experiencing worrying signs of community outbreak. In the past two weeks, the number of cases outside China has increased 13-fold.
Countries are implementing unprecedented measures to curb the spread of the virus, including cancelling all mass gatherings, closing schools and public facilities, and suspending non-essential travel from high-risk countries as well as quarantine measures. The outbreak has already had an impact on many businesses and the measures undertaken are compounding the challenges these businesses are facing. From an insurance perspective implications for various lines include travel, medical, credit, event cancellation and business interruption. As businesses struggle to pay bills, insolvencies will increase and this will impact trade credit insurers. Certain travel insurers in the UK have withdrawn cover for future coronavirus claims. This legal update however will focus on business interruption insurance and event cancellation. 
(i) Business Interruption Insurance
Businesses often insure against the risk of material damage to property, including risk of business interruptions arising from such property damage resulting in partial or total closure of the business, which in turn leads to loss of profits. Insurance against such losses is often called “business interruption” insurance (BI). 

Continue Reading