May Insurance

Business Interruption policies failing to pay out

It is a difficult time for all business in Britain now. The coronavirus health pandemic that the nation is battling against has forced the majority of businesses to shut their doors to prevent further spreads of the virus. Many businesses have turned to their business interruption cover to support them through these challenging times, only to be faced with claims being rejected! Legal action is being pursued against many of Britain’s leading insurance companies for rejecting claims that are seeking a payout for legitimate business interruption circumstances.

Hiscox is in the front line of the controversy after selling business interruption policies prior to the Coronavirus pandemic; which clearly stated that it would pay out for a notifiable disease that forced a business to close. Many business owners have submitted claims to their insurers, and in response are being informed that their policies do not cover health pandemics.

Hiscox stated that it has approximately 10,000 companies which had purchased its business interruption insurance cover that had been forced to close due to government ruling. One company, who are planning to sue Hiscox, said that they bought their policy as it is designed to protect them when they are unable to use their premises. One of the reasons included in their policy was restrictions imposed by public authority, following an occurrence of a human infection or human contagion disease (an outbreak of which must be notified). Despite this wording seeming like the exact circumstances that Britain currently faces, Hiscox state that the current pandemic is not an occurrence, causing the claim to be rejected.

Business interruption insurance policies typically pay out a maximum of £100,000 to claimants to cover the losses to their business to help their business survive. The Financial Conduct Authority has told insurers that they must treat their customers fairly during the current circumstances. However, there has not been any reports of insurers paying out for these types of claims. Hiscox advised that their business interruption policy was not designed for these extraordinary circumstances as it is simply too large to cover.

Cyber experts' opinions on the current pandemic

The coronavirus pandemic has affected us all in one way or another, and with those who are able to work from home, teleworking has become the new “normal”. At a recent webinar, two experts in the online security field divulged their opinions on the crisis and how it may affect us all.

Director of incident response at AreteIR, Mark Bleicher assessed the situation as follows;

“A lot of the recent [cyber] activity in the last week has been around taking advantage and preying on the social engineering, or the human aspect of our workers. There’s been such an increase with malicious email attachments during COVID-19.”

“One of the biggest challenges that I think we all need to really take a look at over the coming months is how we stay aware and protect ourselves,” he said, “and how organisations are going to protect us as workers.”

“The amount of malicious activity is increasing and it’s not going to go away… Right now, there’s a crisis that’s happening and adversaries are taking advantage of it,” he said. “One of the other things to consider too is when all this is over – what are we bringing back into the office and reconnecting? What are we introducing back into the environment?”

If you have concerns about your employees’ wherewithal in terms of their online presence, then providing training is the only way to address those concerns. Fortinet, an online cybersecurity training specialist, has made all of its courses free for the remainder of 2020 in order to help keep businesses safe through coronavirus and beyond. As well as basic awareness courses, there are also more in-depth and advanced security courses available, in addition to a specific teleworkers’ course. You can see all of the available free courses here.

Working from home and insurance cover

With the nation working from home, where possible, there are many questions surrounding the type of home and contents insurance cover you have, and whether this is currently valid in line with your altered daily activity. There are many differences to consider with the move to remote working, such as the movement of stock and equipment being kept in a different location, changes to vehicle usage, and changes to working practices. We’ve gathered all you need to know about home working and insurance requirements below to answer all your questions.

Do I need to tell my insurance provider I am working at home?

The Association of British Insurers has confirmed that it is not a requirement for people to inform their home and contents insurance providers that they are working from home. There is not a requirement for policyholders to update their policy documents or buy additional cover if they are temporarily working from home.

There would be one exception to this; if people were visiting your home as part of your work. If this were the case, your policy would need to be updated. However, with the current government social distancing rules, this is unlikely to be the case for anybody at present.

I’ve taken my work equipment home, is this insured?

You should check with your insurance provider to see if any work-related equipment or stock, such as laptops, hard drives, phone equipment, or products would be included under your current contents’ insurance. It may be that because these items would not usually be in your home, that they are not covered under your own home contents insurance policy. However, there is no need to worry, your employer should have the appropriate cover in place to protect equipment and stock that is being used or stored away from the office.

Is my car insurance still valid?

The use of vehicles has reduced massively since the start of the pandemic. For many people who have stated on their insurance documents that their car is kept at the office car park during the day, this is no longer true. The Financial Conduct Authority, which regulates the UK financial services sector, stated that consumers are not required to inform their car insurers of the temporary change to their policy details. Insurers are taking a flexible approach to the interpretation of policy wording due to the current circumstances.

I have moved my services online, am I covered for this?

There has been an increase in people turning to online tutorials as a new form of work during this time; most popular being online fitness classes or cooking classes. Providing this public service online requires additional insurance as there is a public liability risk of an injury being caused to somebody who is using your business. A survey from the fitness industry found that over a third of online fitness instructors did not have the appropriate level of insurance to be operating. Should a customer of theirs be injured, their business could face several issues and costs. Because of the potential risks to customers, anybody with an online tutorial business such as those mentioned, should have appropriate public liability insurance.

Not using your car? What this means for your insurance

Everybody has made changes to their daily routines and movements each day. With the nation staying at home, the roads clearer than they have ever been as most people are hardly using their cars. Car insurers have reported a 50% reduction in car insurance claims during lockdown. The government have also reported that driving is down by a whopping 75%. However, do the usual rules about updating your car insurance to any driving changes that still apply? We take a deeper look into your car insurance questions during this current health crisis.

My MOT has been extended. Is my car insurance still valid?

If you have been entitled to a MOT certificate extension, this means that you are still effectively covered by your last MOT. With your MOT still valid, insurance policies will continue to be valid till their renewal dates during the six-month MOT extension. However, it is still important that car users keep their cars in road worthy condition. There are many car garages that continue to operate during this time for emergency repairs, so it is important to maintain the safety of your vehicle.

Can I get a refund on my car insurance if I’m not using my car?

It is not a requirement for car insurance providers to provide a refund on your policy, despite the reduction in your car usage and the reduced risks.

Admiral are the first UK insurer to offer their customers a cash refund for the reduced level of car usage in the current circumstances. They have stated that all their car or van insurance policyholders that were actively insured with Admiral or their associated brands on 20 April 2020, will each receive a £25 refund. This is a whopping 4.4million drivers set to receive the refund. Admiral are also waiving the any motor excess claim fees for emergency service workers, and also providing a free courtesy car if theirs is stolen or badly damaged to enable them to continue to travel to work.

Will my car insurance premium be reduced?

As mentioned above, there is no requirement for car insurers to reduce or recalculate premiums automatically, but you could contact your provider to update your yearly mileage to a reduced amount, in line with no longer commuting. This could trigger your premium to be reduced.

Another option to save money on car costs during this time is for those who are not using their cars at all. If your vehicle is no longer on the road you could declare your vehicle off road completely with a Statutory Off-Road Notice (SORN). This application can be made directly to the DVLA which could result in you receiving a tax refund. However, when your vehicle is declared as SORN you are not allowed to drive the vehicle again until you inform the DVLA and tax your vehicle.

What is furlough - a guide.

A word that has entered our vernacular for the first time for many of us is ‘furlough’. A few months ago this may not have been quite as familiar as it is now, and with 7 in 10 employers saying they have already used, or intend to use, the furlough scheme this is something which we will become ever-more familiar with. We have put together the key points of the government scheme, as well as included some useful links if you are considering making use of the scheme within your own business.

What is furlough leave and the Job Retention Scheme?

Essentially, it is the government initiative in order to avoid large swathes of employees from being made redundant during the current economic climate – it pays most of an employee’s wages whilst the employee is on furlough. The scheme will pay 80% of an employee’s usual wages, up to the value of £2,500 per employee per month. The scheme started from 1^st March 2020 and is in place initially for a 4-month period.

Who can I furlough?

You can furlough any worker, including salaried directors, apprentices and zero hour workers as long as they were on your PAYE on 19^th March 2020 or before. Each employee has to be furloughed for a minimum of three consecutive weeks, if you are going to claim the government grant.

How do I apply?

The Government have set up a HMRC portal so that you can apply for your furlough grant online – you will first need the details of the employees that will be entered into the scheme, as well as their earnings, so that the 80% value can be calculated and paid to you appropriately.

Can I rotate employees?

As long as an employee is furloughed for the three week period, they can then be rotated with another employee. An employee cannot do any work for you when they are on furlough.

Do I have to pay the wages before I claim back on the scheme?

In most cases the answer to this will be yes – the grant is intended to act as a reimbursement of wages that have been paid.

Useful Links and Guidance

See the Government guidance here.

Submit your claim here.

Apprentice arrangements during Covid – read here.

The self-employment Income Support scheme – read here.