Coronavirus (COVID-19) Insurance Update 2
26th March 2020
Following on from our first Coronavirus Update, as should now be clear from the media there is virtually no Business Interruption cover for the pandemic and most mainstream insurers have now confirmed this point. As mentioned in the previous newsletter, some risks are ‘too big’ for insurers and with the global cost of the pandemic now unfolding, including the UK Government’s £350 billion rescue package for business, it is easier to appreciate why.
With the vast majority of UK business now affected by the crisis we must look to the Government for financial assistance, but there are still many insurance related issues surrounding the virus.
Our trade association, the British Insurance Brokers Association (BIBA) have started to lobby the major stakeholders in the insurance sector on a range of issues and are looking for an industrywide rather than individual insurer approach to the following.
Premium Instalment Facilities
BIBA have asked for assistance in terms of payment holidays or extended credit terms and we are currently waiting for further news from BIBA or insurers. Aside from the insurers’ own schemes, our main finance provider, Close Brothers, are working on a plan to help, but in the meantime, they will consider assistance on a case by case basis. Their contact information is as follows:
- Personal lines policyholder 0333 321 8566
- Commercial lines policyholder 0333 321 8567
Alternatively, you can email email@example.com
Please note that you will need to have your agreement number to hand which will be on the welcome pack or payment schedule received from Close.
Can you still operate vehicles? – using a vehicle illegally would have potential ramifications in the event of a claim, however, we cannot see that insurers will penalise policyholders should a vehicle be used in breach of the current restrictions, particularly if an employer is unaware of an employee’s actions. The current guidelines are for staff who can work from home to do so, otherwise going to work and certainly using a vehicle for work has not been banned. The only way that we can see this changing is if there is a total lockdown.
Can employees on ‘Furlough Leave’ use vehicles? Yes, they remain employed and can use vehicles in the same way as if they were on holiday. The Government are obviously trying to minimise unnecessary travel, but if you do not currently allow employees social/pleasure use and wish to change this during the ‘leave’ period, please let us know. This is generally a company’s policy rather than an insurer restriction, but occasionally the latter applies. The main point to note is young driver exclusions. It may be that individual staff circumstances of self-isolating or caring for family could mean younger drivers needing to drive. It is entirely up to you as a company as to whether you grant such requests, but if you wish to do so we will have to obtain your insurer’s agreement first.
Parking – We expect insurers to understand that vehicles may be parked in different locations i.e. at employees’ homes rather than your premises. Where a vehicle is effectively ‘mothballed’, where practicable, they would obviously expect tools etc. to be removed from vehicles.
Can vehicles be used for voluntary work i.e. delivering prescriptions to the vulnerable or for the NHS? – Probably – Aviva have confirmed this is okay so long as it is voluntary and not for reward. Receiving mileage and expenses is not regarded as reward. We expect other insurers to take the same line.
MOTs -You should be aware that the Government have announced that there is an automatic 6-month extension to current MOTs from 30 March. MOTs that are due before then still need to be undertaken.
Motor Insurance Database (MID) – BIBA have asked the authorities, including the Police, for leeway should there be delays in updating the system, either on the part of the policyholder or insurer.
We do not see any particular issues with liability cover for staff working from home, although the law will still expect risk assessments to be undertaken.
Please note that your employees may need to notify their own home insurers; however, BIBA are seeking agreement from home insurers that this is not necessary during the crisis.
You may need to ask us to extend your policies to cover computer and other equipment at your employees’ homes. Some policies will already cover property away from your premises, but others will be restricted to the premises only. Please take the value of the equipment into account as there is likely to be a policy excess, most likely around £250, before deciding whether cover needs to be extended.
For those that cannot work from home, the Government have said that they can still do so if they can comply with the two metre social distancing rule. Obviously whether this is possible will be dependent on the location and will be subject to compliance with normal health and safety requirements. You will also need to enforce the Government’s guidelines on isolation and hygiene.
In normal times, policy conditions require notification when all or a significant part i.e. a floor becomes unoccupied. Some policies allow a certain period of time, typically 30 days before restrictions come into force in terms of exclusions and/or risk management measures relating to security and water system.
We have already had confirmation from a few insurers that they will waive the notification and any restrictions in cover subject to ‘appropriate best endeavours’ to take reasonable precautions but would ask you to notify us and we can then notify your insurers accordingly.
Reasonable precautions would include making the premises as secure as possible, maintaining alarm systems and keeping heating systems operational unless water systems can be drained down. Where relevant, it is important to comply with minimum levels of security which will be detailed in your policy wording. Unless we go into complete lockdown, premises should also be checked regularly, ideally at least weekly and particularly where water systems cannot be drained.
We understand that some landlords are trying to ban access to premises i.e. serviced offices, thereby restricting what measures can be taken. We would expect insurers to be reasonable in such circumstances, however, would recommend that we are told so that we can notify insurers.
We should also be notified if there is a change of use of your property.
Some plant and equipment legally require inspection within certain timeframes. We have been warned by one insurer that they will be prioritising inspections for critical industries such as food, health, water and power, so others may be delayed. The Health and Safety Executive (HSE) have issued a statement and whilst they are not at presently allowing any exemptions or relaxation of current legal requirements, they are keeping the matter under review. They have pointed out that under certain circumstances, with the agreement of a suitable competent person, some legislation allows examinations or inspections to be postponed. However, it remains your responsibility to ensure the equipment is safe to use.
Understandably you may be considering cancelling some of your covers. It goes without saying that if you do you will not be covered, but with some types of liability insurance you will not be covered for work undertaken prior to the cancellation and may prove to be a false economy.
Products Liability – claims are on an occurring basis. If you have supplied a product or service before cancellation and it causes injury or damage after the date of cancellation, you will not be covered.
Professional Indemnity – policies are on a ‘claims made’ basis meaning cover must be in force when a claim is first made, rather than when the work was done or error occurred. After cancellation you are not therefore covered for any new claim.
Professional Indemnity policies also have a retroactive date, usually the original inception of the policy, being the date from which work that you have done is covered. After cancellation, should cover be required again, it may be difficult to obtain cover going back to the cancelled policies retroactive date.
Cancellation may also put you in breach of contractual conditions with your customers or suppliers and some types of policy are either subject to minimum premiums or do not allow a return of premium. Also, if there has already been a claim during the insurance year, you may not be entitled to a return premium.
Be aware. There are reports that some criminals are trying to take advantage of the crisis, particularly with staff working from home and possibly not having sufficient levels of protection in place.
General Changes to your Business
As already explained, your policies require notification of changes to your business. You will have given ‘a fair presentation of risk’ to your insurers and are required to tell them of any changes. We have dealt with some of the common changes we expect to occur but there will obviously be others. We are expecting insurers to be reasonable and if the changes are minor there should not be a problem but please ensure we are notified.
Please note that our staff are working from home with just one person presently attending the office. Our telephones have been redirected and you should be able to contact us as normal by either phone or email during this difficult period.
Once again, please note that this is generic advice, some of which is our opinion and we do not currently have all the answers as we are in unchartered territory. So far insurer responses to the crisis have been reasonable and we expect that this will continue, but we hope you will appreciate that we cannot provide a definitive answer as to every eventuality in this newsletter. We will send further updates as appropriate and particularly if BIBA obtain any market agreements on the issues raised. If you require more information about your own policies, please speak to your usual Nsure contact.
Additionally, we have a range of factsheets on our website with useful information about various types of insurance including Business Interruption, Cyber, Directors and Officers, GAP, Intellectual Property, Professional Indemnity and Terrorism. There is also advice on underinsurance and write-offs.