Insurance giants are reportedly denying claims for virus cover and now Torbay businesses are being urged to unite in battle
Businesses whose trade has been decimated by the Coronavirus pandemic are facing an uphill struggle with big insurance companies over claims for their huge losses, it has been claimed.
Many, especially in the tourism and hospitality sector, thought their business interruption cover would include the devastation and loss of earnings caused by the virus which forced them to close their doors. But their claims are being thrown out.
Now they are being advised to unite and take on the insurance giants together.
A company which owns one South West hotel says it was especially careful when taking out its cover after buying the hotel in 2005.
A spokesman said: “With the closure of the countryside by the Foot and Mouth outbreak in 2001 and against the background of SARS in 2003 and 2004, we were very careful in specifying the maximum level of Business Interruption insurance cover for disease related disruption.
“We were fully aware that we were paying a higher premium because we had the enhanced cover.
“We have always maintained that cover. Our policy specifies that to be effective any occurrence has to be a ‘Notifiable Disease’ and occur within a certain distance – in our case 25 miles.
“COVID-19 became a notifiable disease on March 5 and there are documented deaths at a hospital just 15 miles from us. We have made a claim, but it has been rejected.
“This cover differs from the majority of insurance policies which only cover outbreaks of diseases on a list – as a new disease COVID-19 is not on any list.”
Simon Bean, who is a partner at South Devon law firm Wollens and specialises in business-related disputes, says: “This is an issue for businesses across the South West, especially in the tourism sector. It may well affect many local businesses who have, and have paid for, insurance which is now possibly being improperly declined.
“Insurers typically have the resources to contest insurance claims, and if policy holders with the same cover join forces to show a united front, this manages risk and reduces cost, which will undoubtedly apply pressure on insurers to do the right thing and honour policies.”
Mr Bean can be contacted at firstname.lastname@example.org or on 01803 213251