Is your insurance covering your hospitality business over coronavirus?

Jacopo Mazzeo

Jacopo Mazzeo

20 March 2020

We asked the Association of British Insurers to clarify whether and which insurance policies will be covering hospitality businesses over the coronavirus pandemic.

With numbers of visitors to pubs, bars and restaurants dropping by the hour, on-trade venues have been left wondering whether insurance policies will be of any help to survive the crisis.

As doubts and speculations arose following the government’s advice to all people to stay away from on-trade venues, we asked Association of British Insurers’ Malcolm Tarling to clarify the matter.

Should on-trade outlets expect their policies to cover the coronavirus pandemic?

Very few companies have the right cover. Most will have a standard business insurance but any cover in respect to pandemics is normally offered as an add-on, so as a company, you’ve got to decide if you want it.

We believe that very few [bars, restaurants and pubs] actually have a cover that will kick in in these unprecedented circumstances.

Can you give us more details?

It’s a very specialised area and it’s called ‘contingent business interruption insurance’.

What it does is that it will cover you for loss of profits and additional costs if you’re forced to shut your business down.

Most policies will kick in if there’s an incident linked to a series of listed pandemics, which obviously won’t feature Covid-19 because it wasn’t known when they were taken out.

Are you saying no insurance policy will be covering Covid-19?

There may be some policies  – we don’t know how many  – which will offer cover on the outbreak of an unspecified pandemic. So, in other words, pandemics won’t be named and listed, and businesses will be covered if affected by any possible pandemic. But I would emphasise that these companies are very much in the minority.

The government hasn’t enforced the closure of on-trade premises. Does this make any difference when making a claim?

There’s been some misreporting and confusion in the last couple of days with businesses thinking they could claim on their insurance [if forced to close by the government]. What is important here is whether the business has the right level of cover. If your policy covers named pandemics, you won’t be able to make a claim. And I would again stress that the number of firms with an insurance that covers unnamed pandemics are very rare.

What should venues that aren’t covered do?

The government, a couple of days ago, announced a £330bn package of support for firms and further details on that are going to be published very soon. That’s what any business without the relevant insurance policy needs to be looking at right now.

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