BUSINESS INTERRUPTION INSURANCE CLAIMS
Your Business Interruption Policy
What is Business Interruption Insurance?
Business Interruption Insurance is insurance coverage which caters for lost income arising as a result of a disaster. Examples of this include fires and natural disasters which have affected the business premises, and therefore insurance policy covers the disaster-related closing of the business facility or the ensuing rebuilding process.
Otherwise known as Consequential Loss Insurance, this insurance policy differs from property insurance by offering additional coverage which covers the profits that would have been earned had this disaster never occurred, thus restoring the business to the same financial position it would have been in if no loss had occurred.
BII coverage is not sold as a separate policy but is either added to a property/casualty policy or included in an existing comprehensive package policy.
What are the requirements for a Business Interruption Insurance Claim?
There are 2 facets to a Business Interruption Insurance claim:
(1) A specific and defined event, outlined in your overarching insurance policy or clearly defined within a standalone case, must cause your business to suffer lost revenue.
(2) This event must cause the business to shut down in whole or in part.
This insurance coverage will last until the end of the business interruption period. This period is the date that the covered event began until the date that the damaged property is physically repaired and restored to its initial position prior to the disaster. While this period is determined by the specific insurance policy, the Insurance Information Institute has specified this to be 30 days, with a possible extension to 360 days under an endorsement.
What can I claim for under Business Interruption Insurance?
(1) Profits that would have been earned.
(2) Operating expenses and costs incurred by the property (based on financial records and historical costs)
(3) Expenses incurred for moving to, and operating from, a temporary location
(4) Training costs for new machinery following the insured event
(5) Reimbursement for reasonable expenses which allow the business to continue operation while the property is being restored
(6) Compensation for Government mandated closures of the premises which include loss of revenue
How do I start a business interruption insurance claim?
What will my Business Interruption Insurance policy look like?
(1) The time period for which the interruption will affect the business (the indemnity period)
o The ‘indemnity period’ is the period for which the business is affected by the interruption caused by the damage. This period is limited to the maximum allotted time period selected by the policy holder. In determining this period, the policy holder must take into account the type of business, the time taken to replace specialist machinery, the types of customer and other factors that may have an impact upon the speed of a firm’s recovery to its initial trading position.
(2) The maximum amount that needs to be insured (the Gross Profit)
o The business interruption policy only needs to cover the policy holder’s net profit and fixed expenses.
o In order to calculate the Gross Profit, the insurer will deduct variable and uninsured working expenses from the turnover, as variable charges (purchase of raw materials and working supplies) will reduce due to the reduction in turnover.
o In short, this type of cover requires the policy holder to estimate the gross profit for the upcoming year, and insurers apply a one-third uplift in order to take account of any future growth in turnover.
In addition to these elements, cover is provided for all types of loss or destruction/damage to the property, provided that the cause is not specifically included from the policy.
Can I claim an extension for Business Interruption Insurance?
The most common extensions include:
(1) Losses resulting from damage at the premises of suppliers
(2) Losses resulting from damage at the premises of named customers.
(3) Losses resulting from damage to the property of the insured whilst in transit
(4) Losses resulting from access to an insured’s premises being prevented due to damage to nearby premises.
(5) Losses resulting from damage at the premises of a public utility
(6) Losses due to the occurrence of a notifiable disease, vermin, defective sanitary arrangements, murder and suicide.
Business Interruption Insurance and COVID-19
Can I claim Business Interruption Insurance following the COVID-19 pandemic?
Previously, under the guidance offered by the Information Insurance Institute, Pandemics, viruses, or communicable diseases were not covered under Business Interruption Insurance, as this policy only covered situations where there has been physical damage to the premises.
Therefore, if COVID has affected your business, then you could be eligible for a claim.
Why has the Supreme Court decided to allow COVID-19 claims for Business Interruption Insurance?
(1) Disease wordings: This provides cover for losses arising from the occurrence of a notifiable disease within a specific radius of the insured premises. COVID-19 was made a notifiable disease in England and Wales on 5 March 2020, and SARSCoV-2 was made a ‘causative agent’.
(2) Hybrid wordings: This provides cover for BI losses sustained where restrictions have been imposed on the insured premises in relation to a notifiable disease.
(3) Prevention of access / public authority wordings: This provides cover for losses sustained where access to the insured premises has been prevented or hindered as a consequence of authority restrictions due to an emergency in the vicinity of the insured premises.
The Supreme Court confirmed that disease wordings provide cover for Business Interruption losses arising from at least one case of COVID-19 within the specific geographical radius of the premises from which business is conducted.
The Supreme Court also confirmed that there must be an ‘inability’ to use the premises, rather than something less. This may be satisfied where a policyholder is unable to use the premises for a discrete business activity or unable to use part of the premises for its business activities. A ‘restriction imposed’ by a public authority must carry the threat of legal compulsion and must be reasonably understood by the public that it must be complied with.
Overall, the Supreme Court makes cover more readily available for policyholders under the prevention of access and hybrid clauses within the insurance agreements. Therefore, this decisions widens the scope for claimants to recover losses as a result of the COVID-19 pandemic and the public health measures taken by the UK authorities.
Does this Supreme Court Case mean I am eligible for a Business Interruption Insurance Claim?
However, each insurer offers a range of different policies, which may differ according to the ones which were examined by the Supreme Court. Therefore, it is best to check your policy in light of this judgment in order to analyse whether a claim is available.
How can I investigate my insurance policy to see if I can bring a claim due to COVID-19?
Moreover, there may be claims present within multiple clauses of your agreement. As demonstrated within the Supreme Court’s Judgment, a claim could be initiated through ‘Prevention of Access’ clauses, as opposed so a Disease clause.
Overall, the definitions within the insurance document are vital to assessing whether COVID-19 falls within the parameters of your agreement.
Starting Your Claim With Us
Can any type of business in any sector make a claim?
What steps should I take to see if I have a BII claim?
If your insurance broker or insurance provider previously informed you that you were not covered, then their advice is likely to have been based on the position prior to the Supreme Court judgment being handed down. Therefore, their stance may have changed as a result of this case.
Insurance policies have specific time limits for notifying your insurer of a potential claim. Therefore, do not hesitate to get in contact with our lawyers at Charles Lyndon and your insurance provider if you believe that you may have a claim.
What documents will I need to make my insurance claim?
These documents will include:
(1) Insurance certificate
(2) Your Full Insurance Policy
(3) Your Policy Schedule
If I cancelled my insurance policy before it expired, can I still make a claim?
If the client cancelled the policy prior to it lapsing then it would continue to cover the client but there will likely be deductions for the period of time that any specified premiums were not paid.
It is necessary, in order to move forward with a claim, that you obtain the policy wording document from a link emailed to them, as the policy wording may have changed since they first took out the policy. It is therefore essential that the original policy documentation be acquired.
I have lost some of these documents, can I still make a claim?
My insurance company already rejected my claim? What do I do?
At Charles Lyndon, we operate on a ‘No Win, No Fee’ basis, and we are happy to assess your insurance policy to examine whether your claim is substantial enough for a claim.
Do I have to be a director of my company to make a claim?
Can Any Type Of Business In Any Sector Make A Claim?
Charles Lyndon & BII Claims
What are the benefits of claiming through Charles Lyndon rather than submitting a claim myself?
Charles Lyndon will structure your claim in a manner that will ensure that your claim is dealt with swiftly, without your insurance company rejecting your claim on the basis of insufficient information. Our legal experts will also be able to assess your claim and maximise the amount of compensation which you are entitled to.
Have Charles Lyndon successfully dealt with these claims before?
Who will I be dealing with along the way?
Is there an additional fee if my claim is successful?
Can any type of business in any sector make a claim?
When will I receive a payout?
FIRST STEPS: STARTING YOUR ASSESSMENT
To start your business insurance interruption assessment, fill out the below form and then send through the requested insurance documents, our lawyers will review your claim and get back to as quickly as possible.
Fill out your details relating to your BII claim below, click submit and follow the instructions on the following page. We will aim to get back to you within 2-5 working days.