The plumes of smoke were visible for miles around and a reminder that ‘normal’ risks are still an ever-present danger. It is not just COVID-19.

The recent explosion and subsequent fire at a scrap metal dealer in Lancing spread to a garage on the adjoining land run by one of our clients. They suffered damage to their building, but fortunately, the fire did not take hold properly thanks to the efforts of the fire brigade. Our client managed to save most of their vehicles and equipment from the affected part of the building, however, the cost of repairs will be significant, and an area of the premises is unusable with the smell of smoke still lingering.

Their policy was renewed during the lockdown and like many businesses suffering a dramatic reduction in income, they considered drastic cuts to their insurance. However, they were persuaded otherwise, settling on some reductions rather than anything too severe and are obviously now pleased their main covers remained in place.

The temptation to cut back on insurance is understandable, however, the last thing a business needs when income is tight is dealing with a significant uninsured loss. Most insurers have tried to assist during the crisis by offering payment holidays and a more flexible approach to policy estimates of turnover and wages.  There has also been a realistic stance on cover for premises left empty during the crisis, which have shown insurers in a good light, however, after the initial bad PR with the lack of Business Interruption cover for the pandemic, it looks like the insurers will be seen to shoot themselves in the foot again. Despite what I said last month, the signs are that most insurers will now exclude virtually all cover related to COVID-19 as policies fall due for renewal.

This is certainly the case for package policies designed for SME business, although it is fortunate that as a compulsory insurance, legislation prevents insurers excluding COVID-19 from Employers Liability cover and companies will therefore be protected should an employee claim they have caught the virus at work.

However, companies will not be protected if a claim comes from a third party, which could emanate from working on site, products supplied or the public visiting a business premises. The exclusion may not be too much of an issue to many companies, but you wouldn’t want to operate in some sectors, such as care, without cover.

A big concern to businesses will be if insurers exclude all COVID -19 related claims from Directors and Officers policies thus removing cover for directors’ decisions relating to the crisis and unfortunately, the signs are that COVID-19 will be excluded, particularly on policies for smaller business. But to do so as businesses face the prospect of introducing protective measures against a disease (about which much is unknown and with guidelines changing all the time), to me, is unethical.

Cover will no doubt remain available at a cost, but in the meantime, insurers seem to be running scared of the compensation industry, court decisions and legislation. A situation exacerbated by the actions of successive Governments.

What a mess.