The Insurance industry has received a lot of criticism since the arrival of Covid19. Many business owners have looked to their insurance policies and found they were not covered. The positon was not helped by conspiracy theories suggesting the Government was holding back on restrictions to protect insurers.
Insurance, in simple terms is a pool of money contributed by the many to meet the losses suffered by the few. It is not sufficiently funded to meet losses on the scale we are seeing. Therefore, insurers exclude wide scale risks such as war, nuclear risks and in this case pandemics as such risks cannot be quantified sufficiently to charge an equitable and realistic premium.
To put things in context the largest insured loss worldwide was Hurricane Katrina which cost insurers about US$82 billion, while in UK terms the 2007 floods cost circa £3 billion. Set this against the £300 billion the Chancellor has allocated and you will see that insurers could not have met the kind of losses being experienced.
While most policies exclude the risk altogether some have extensions to the policy which give a small amount of cover for denial of access, with wordings which could be wide enough to meet claims in the circumstances we are experiencing. At David Haskoll Ltd, they have three clients on a policy which provides £100,000 of cover for losses over a three-month period where the business is forced to shut because of a Government edict. They have submitted claims on these. It is worth looking carefully at your policy in case you have a similar clause.
Some of the schemes for dentists and doctors appear to potentially have cover for limits of £25,000 to £50,000. At least one scheme for nurseries has a wording which appears wide enough to pick up claims with a limit of £250,000. The words ‘appear to cover’ are used as those insurers providing these extensions never envisaged the kind of potential claims we are seeing and are naturally looking very closely at their wordings to see if cover is included.
To assist any member who finds reading through an insurance policy confusing, David Byrne will gladly check your wording for you. They will need a copy of your policy wording and the policy schedule as the latter often shows the limits and if an extension has been included.