THE Association of British Insurers (ABI) has announced that the “vast majority” of businesses will not have adequate levels of insurance to cover venue closures due to the outbreak of an infectious disease.
The savings and insurance body said in a statement today (March 17) that the “vast majority of firms won’t have purchased cover that will enable them to claim on their insurance to compensate for their business being closed by the coronavirus” and are urging business owners to verify their level of cover with insurance companies.
Standard business interruption cover – the most common type of business insurance purchased by business owners – only protects the closure of venues in the event of “physical damage” to properties, not mandatory closures by authorities, the insurance and savings body has said.
The ABI announcement comes as prime minister Boris Johnson told the British public yesterday to “avoid pubs, clubs and theatres” in a bid to slow down the spread of the virus.
The full statement said: “Irrespective of whether or not the Government orders closure of a business, the vast majority of firms won’t have purchased cover that will enable them to claim on their insurance to compensate for their business being closed by the coronavirus.
“Standard business interruption cover – the type the majority of businesses purchase – does not include forced closure by authorities as it is intended to respond to physical damage at the property which results in the business being unable to continue to trade.
“A small minority of typically larger firms might have purchased an extension to their cover for closure due to any infection disease. In this instance an enforced closure could help them make a claim, but this will depend on the precise nature of the cover they have purchased so they should check with their insurer or broker to see if they are covered.”