The Coronavirus has taken the world by surprise and the uncertainty of what may or may not happen is concerning for us all. In recent days we have been receiving many enquiries about insurance coverage for the impacts of loss of business income and also travellers looking to cancel trips.
Insurance coverage will differ depending on the product and the issuer however the principles are fairly similar so it is possible to provide some general guidance.
Business Interruption – Loss of Profits
Most business or practice insurance policies provide an optional Business Interruption section. If this section is taken then it can provide cover for the loss of income that occurs following damage at the business premises. For business interruption cover to apply there would need to be some damage at the premises. This can be property damage but can also be equipment breakdown, theft etc. The Corona virus at least at this stage would be unlikely to trigger this type of damage.
Many dental and medical practices are struggling to purchase surgical masks which they require to see patients. As there hasn’t been damage at the practice there isn’t any insurance damage that would then trigger the loss of income from not being able to practice.
Business interruption insurance policies generally cover losses incurred as a result of closure of an organisation’s business premises by public authorities due to the outbreak of infectious or contagious disease. Typically, business interruption insurance policies exclude cover for any diseases that have been declared to be notifiable or ‘quarantinable’ diseases under relevant Commonwealth legislation.
As the COVID 19 (Coronavirus) is a listed human disease under section 42 of the Biosecurity Act 2015, the policy exclusion applies, and as a result, business interruption losses are not covered by insurance.
Travel insurance coverage varies significantly as there are many many different products available. Most personal leisure type policies will have an automatic exclusion for an outbreak of infectious disease meaning cover is unlikely.
However, Business travel policies which is what we most commonly provide to our clients, do not usually have exclusions for pandemics or epidemics. However most policies will not cover a situation that is not unforeseen, that is it is reasonably likely to occur. There are many travel warnings now being issued by the Department of Foreign affairs and the World Health Organisation . We would strongly recommend checking these warnings before undertaking any travel. Any new travel booked is unlikely to be covered for cancellation, the actual cutoff date will vary from insurer to insurer.
If you are concerned about your situation or travel arrangements and require further clarification then please do contact our office. In time we will hopefully look back at the impact of the Corona virus and find that the fear and panic were overblown. However, please do take care and don’t be offended when someone offers a back slap rather than a hand shake!