How insurance can help your business face the COVID-19 pandemic

Here are the answers to the most frequently asked questions regarding insurance and how it can help your business face the COVID-19 pandemic, from whether you are covered in the case of an event cancellation to what could happen if you ask your staff to return to work and they get ill.

My business has lost money as a result of the virus and/or lockdown, can I claim this back on my insurance?

Many businesses have suffered financially as a result of coronavirus and the lockdown. In the UK, GDP fell by 20% in April, the largest monthly drop on record.

Although the games industry has proven more resilient than others, it is by no means immune and many businesses have struggled.

There may be some assistance available depending on the type of insurance you have. Business Interruption Insurance covers companies for financial loss due to various disasters. It is often sold as part of a corporate package policy so you may find you already have some cover in place depending on where you bought your insurance. To make a claim you would need to have had it place before the virus became widespread.

Many insurers have been caught out by this situation and are attempting to deny claims on technicalities

Depending on your cover, you may be able to claim for lost earnings and/or other associated costs you have incurred due to COVID-19 and the ensuing lockdown (such as buying extra equipment to enable working from home) -- also known as Additional Increased Cost of Working. This is a more unusual cover, but is occasionally also included as part of a package.

Unfortunately for businesses, many insurers have been caught out by this situation and are attempting to deny claims on technicalities. One major UK insurer is currently under heavy fire from thousands of angry policyholders who are all small businesses that have been denied claims.

This emphasises the need to choose your insurer carefully when taking out any policy, as the coverage and quality of service can vary widely from provider to provider.

Due to the virus, my business failed to deliver on a contract, and now I am getting sued. What can I do?

As working conditions have been much more challenging, many companies have struggled to maintain the same levels of output as they had pre-lockdown.

This has caused problems for some companies or contractors, who may have been working to a deadline which they have now missed. For instance, if they were working with a publisher to deliver on a contract before a certain date (e.g. to coincide with a movie release date), the publisher may then sue the developer if they felt they had been let down.

Missed deadlines may not be the only problems they have faced, and although it would be nice if these issues could always be resolved amicably, unfortunately litigation is a common result.

In these cases, Professional Indemnity Insurance (also known as Errors and Omissions) is designed to cover the cost of such lawsuits as well as the ultimate settlement figure. The scope of cover can vary widely from insurer to insurer and is usually the most expensive type of insurance (as it is unfortunately the one that pays out the most claims).

An event I was due to attend has been cancelled, can I claim back the flights/hotels/tickets/other costs?

With many events either being cancelled outright or going digital, there has been huge disruption to people's plans, and many have found themselves out of pocket, unable to get refunds.

To claim these costs back on insurance, it would fall under Business Travel Insurance. You would have needed to have had the policy in place and have booked the trip before the virus became widespread.

Whether you are then covered would then depend on whether there is a Pandemic Exclusion in your policy, and how specific the wording surrounding this is.

Coverage varies from provider to provider and some will be easier to claim from than others. The same logic will also apply to any holidays you had planned if you had normal Travel Insurance in place.

Bear in mind that some Business Travel policies also cover personal trips, so it is worth checking with your company as you might be covered under their corporate policy.

I am considering asking my staff to return to work. If they subsequently get ill and sue the company, could this be covered by insurance?

Employees who can work from home are currently advised by the UK government to continue to do so. However, as the lockdown eases, people may begin to either voluntarily choose to come in or be asked to by their employer.

All businesses should take responsibility for providing a safe environment for their staff, at any time, and this is no different during coronavirus. Maintaining social distancing within the workspace, and proper cleaning and hygiene procedures should now be basic requirements.

The best way to avoid transmission in the office is to not be there. However, if this is not an option, a business owner could face some difficult decisions on when to ask their staff to return to work, and whether the risks are worth it.

With regards to whether the company could be blamed if someone became ill after returning to work, although it may seem obvious the company was at fault -- it would in fact be almost impossible to prove someone caught it in the workplace specifically. They could have also caught it at the supermarket, or from a family member or any number of places.

All businesses should take responsibility for providing a safe environment for their staff

However, if it was found that the company was not following guidelines on providing a safe working environment, or a staff member attempted to sue anyway, company insurance may come in to play.

It is at this point that Employers Liability insurance may respond.

Employers Liability insurance is a legal requirement in the UK for any business with employees, and each company must maintain a minimum of £5 million of cover. If you are a business in the UK you should therefore already have this cover in place.

It is common in many other countries to have similar mandated insurance requirements. In the USA, Workers Compensation is a legal requirement and all employers are required to have insurance to cover payments for medical costs resulting from occupational injuries and some occupational illnesses suffered by workers, plus a partial replacement of injured or ill workers' lost wages.

Directors & Officers insurance may also come into play. As a business owner, if you were sued directly (rather than the company) for an alleged wrongful act in your capacity as director, having insurance here would protect you as an individual. Whether you should consider taking out this cover depends on your relationship with your staff and if you think they would hold you personally responsible.

An event I was organising/exhibiting at has been cancelled, can I claim back my costs?

As an event organiser, a cancelled event can be a devastating blow. Although many events are trying their best to reschedule, they still should have an obligation to attendees to refund tickets.

Cancelled events do sometimes happen, and Event Insurance is fairly commonplace for organisers (or exhibitors) to have in place. Unfortunately, many policies exclude pandemics.

Following past incidents such as SARS and BirdFlu, which caused huge losses to insurers now exclude pandemics by default and offer it an as optional buyback. It is therefore be unlikely that you would be covered for these costs unless you or your broker had the foresight to ask for the cover to be added back in, or you are lucky enough to have this still included automatically.

Many large events have been caught out by this and have had to foot the bill themselves. South by Southwest is one notable example who had Event Insurance but were not covered for pandemics.