A serious concern arises for businesses at the moment in relation to whether their insurance policies will cover them for losses sustained as a result of the coronavirus pandemic.
Cover for infectious diseases
While standard policies will not typically include cover for infectious diseases, some more comprehensive policies, or extensions, may include cover for losses arising from closure as a result of infectious diseases. Much will depend on the wording of the individual policy. For example, some polices which do cover infectious diseases will only provide cover for a list of specified illness.
Cover for Government Ordered Closures
Business interruption clauses are typically intended to apply to physical damage or destruction to the property, arising from something such as fire or flood or some other such event which requires the closure of a premises for restoration works. This type of cover is envisaged to cover losses sustained as a result of businesses being unable to trade while repair works are undertaken.
Calls for action
It has been reported that the Licensed Vintners' Association and the Vintners' Federation of Ireland have received confirmation from two insurers that business interruption cover will not be provided to publicans as a result of forced closures. These bodies have called for the government to engage with the insurance industry to resolve the issue.
The Restaurants Association of Ireland has also raised similar concerns on behalf of its members and has indicated that it may take legal action on their behalf challenging any refusal by insurers to pay out on policies, where the cause of the losses has been the coronavirus.
Central Bank statement
On 27 March the Central Bank issued a statement setting out its expectations of insurers in light of the COVID-19 outbreak. In brief:
- Insurers must put forward consumer-focused solutions on policy payment breaks, rebates and claims.
- While most insurance policies are clear, if there is a doubt about the meaning of a term, the interpretation most favourable to the consumer should prevail.
- The Central Bank expects the CEOs of Irish authorised firms to take responsibility for the oversight of how their firm is managing determinations of whether claims are covered or not in the context of COVID-19.
The situation regarding cover for business interruption remains uncertain, but it appears clear that businesses will be challenging the refusal of insurers to provide cover due to the coronavirus and that there may be ongoing litigation in relation to this issue for some time to come.
For more information please get in touch with Ciara Murphy (Litigation & Dispute Resolution, Insurance & Professional Indemnity).
To discuss any other COVID-19 related issues impacting your business, please get in touch with Barry Cahir (Litigation and Insolvency), Thomas O'Dwyer (Litigation), Sharon Delaney (Litigation), Dorit McCann (EU, Competition & Procurement), Damian Maloney (Corporate and Commercial), Aidan Marsh (Commercial Property), Gerry Gallen (Commercial Property), Sandra Masterson Power (Employment), Paul Gough (Employment), Edward Evans (Corporate & Commerical), Fidelma McManus (Housing) or your usual Beauchamps contact.