What is Business Interruption Insurance?

Business Interruption Insurance is direct physical loss, damage or destruction to property which is caused by an ‘insured peril’ (e.g. fire/escape of water) which in turn leads to business closure. 

In terms of events, there are ‘damage’ and ‘non-damage’ events. For the purposes of this article, we will be focusing on non-damage events.

Examples of non-damage events:-

    • Loss arising from an outbreak of a “notifiable” infectious disease on the property; and 
    • Loss arising from denial of access where the property is restricted from trading by a public authority or personnel are restricted from entering premises. 

Business Interruption Insurance and COVID-19

Since the 28th of February 2020, COVID-19 qualifies as a “notifiable” infectious disease. However, some insurers are still refusing indemnity cover citing the following reasons:

    • COVID-19 is not present on the particular premises; or
    • Covered notifiable diseases are limited to those specifically listed in the policy only; or
    • There is a carve-out/exclusion for “virus” (more common in the aftermath of previous epidemics and pandemics such as SARS, Swine Flu and Ebola virus); or
    • Many businesses were requested (not directed) by the Government to close; or
    • Where COVID-19 was not anticipated as a triggering event, business interruption simply does not apply.

In light of the above, please see below some practical tips that may be of benefit to your business during this pandemic.

Practical tips for businesses:-

  • Obtain full copies of your policies;
  • Record your costs and expenses;
  • Utilise your in-house capabilities to calculate trading losses;
  • Comply with the notification provisions in the policy;
  • Carefully consider making any customer refunds not contractually necessitated;
  • Argue your claim and expect push back;
  • Engage with your insurance broker and legal advisor;
  • Outline your circumstances to other companies and in turn be reasonable with the other parties to your affected contracts. It is important to maintain these relationships into the future.

For further information on Business Interruption Insurance and what it means for your business, please contact our Cork or Dublin offices.