The global spread of Covid-19 has prompted businesses to examine their insurance policies to determine whether business interruption cover can help mitigate financial losses caused by the pandemic.
What is Business Interruption Insurance?
Business interruption policies are policies of indemnity, designed to place a business in the position it would have been in had the interruption not occurred—subject to the policy’s terms, conditions, and limits.
Lacey Solicitors has seen an increase in enquiries regarding business interruption coverage, particularly around whether disruptions caused by Covid-19 are included.
Historical Context: SARS and Insurance Coverage
The 2003 SARS outbreak, also caused by a coronavirus, resulted in significant claims for business interruption. Insurers responded by amending policies to explicitly list the diseases covered, often under “Notifiable Diseases.”
Covid-19, unlike SARS, has had a far greater global impact, with over 349,000 infections and 15,000 deaths in just four months at the time of writing.
Notifiable Diseases and Trigger Dates
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In the Republic of Ireland, Covid-19 was added to the list of notifiable diseases on 20th February 2020.
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In the UK, it was classified as a notifiable disease on 5th March 2020.
These dates are critical in determining the trigger date for insurance coverage. Coverage typically applies after a disease is officially recognised or listed, not retroactively.
The Hong Kong case of New World Harbourview Hotel Co. Ltd v ACE Insurance [2012] confirmed that insurance cover is generally not retrospective—losses occurring before the trigger date are usually not covered.
Challenges for Covid-19 Claims
Most insurers maintain that business interruption policies are unlikely to cover losses from Covid-19, especially if the disease was not listed at policy inception.
AXA Insurance DAC stated:
“When Covid-19 was added to the list of notifiable diseases in England, it did not change policy coverage.”
Insurers argue that covering a previously unknown disease would make insurance unviable and premiums unaffordable for the wider business community.
Where Businesses May Have Cover
Some policies provide broader coverage, allowing indemnity for business losses due to any contagious or infectious disease, without listing specific illnesses.
However, insurers may attempt to restrict claims to ordinary operational interruptions, so careful policy interpretation is essential.
Lacey Solicitors’ Expertise
Lacey Solicitors has specialists in Northern Ireland and the Republic of Ireland dedicated to complex business interruption claims. Our expertise includes:
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Detailed policy interpretation
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Advising insurers, policyholders, and private clients
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Identifying where coverage may respond to Covid-19 losses
We can review your policy, assess the extent of your cover, and advise on potential claims arising from the current crisis.
