As Australia continues to react and respond to the Coronavirus (COVID-19) pandemic, many businesses are suffering extensively.
Government mandates, along with an overall dip in business, are greatly reducing profits to the point where some companies risk permanent damage or closure.
Business owners are understandably reeling from the impact of the pandemic. As a result, Connect Business Insurance receives numerous questions regarding ways a business insurance policy can help those insured.
To help you sort out different types of insurance and what they may be able to do for your business, we have compiled this guide.
Will My Business Insurance Cover Take Care of Losses Because of COVID-19?
Unfortunately, you will likely not have cover for the impacts of the COVID-19 pandemic through your business insurance.
Will My Business Interruption Policy Help?
Generally, business interruption insurance cover will protect policyholders in the event of unforeseen work stoppages that are outside the company’s control. Some examples include:
- Storm Damage
- A key supplier closing
In some instances, stopping business due to biological maladies such as an outbreak of measles is a part of the policy cover. However, the interruption of your business because of the pandemic is typically not covered.
Why Does My Policy Exclude Pandemic Coverage?
After the 2013 outbreak of SARS (Severe Acute Respiratory Syndrome), insurers looked into the potential impact of a pandemic on par with the Spanish Flu outbreak. In the early 20th century, an estimated 40 to 100 million people succumbed to the disease.
By using a predictive model, researchers found that even a global pooling of insurance monies would not be enough to cover estimated losses a pandemic would cause. Essentially, the insurance industry would collapse under the weight of the losses.
The industry responded to these findings by building exclusions into their policies. Because of this, business insurance cover excludes diseases that are reportable under the Quarantine Act 1908, and the Biosecurity Act 2015. Unfortunately, Coronavirus falls into those categories.
Are There Other Types of Business Insurance That Might Impact My Company During the Pandemic?
Yes, there are a few kinds of business-related insurance which may be able to pay out on claims related to the Coronavirus.
Additionally, you need to apprise an insurance representative of various COVID-19 related changes to your business. This is essential so that you can make sure your policy remains in force. You should be sure to review your business insurance policies with an expert in the field. Conditions and amounts of payouts will vary based on numerous factors.
1. Trade Credit Insurance
Because trade credit insurance protects your company from bills, your customers are unable to pay, your trade credit policy can potentially help you during the pandemic. This type of insurance cover is also known as accounts receivable insurance, debtor insurance, or export credit insurance
It is common for Trade Credit Insurance to cover events related to your debtor’s nonpayment because of:
- General default
- Political unrest
The Coronavirus impacts nearly all members of a given business’ supply chain. Even if your company is managing to stay afloat, your debtors and business associates may not fair as well, causing delayed and missed payments. If you are experiencing this issue, contact your insurance company’s representative to learn specifics about your policy.
2. Property Insurance
While it is unlikely that property insurance can offer any direct assistance for pandemic-related changes to your operations. It is essential to inform your insurance representative if your place of business will be unoccupied for an extended amount of time.
It is customary for policies to maintain full insurance cover for 30 days without notification of vacancy from the insured. Your insurer will want a notification that your company’s property is empty after the initial 30 days.
Insurance companies see empty storefronts and offices as a higher risk for break-ins, vandalism, fire, or water damage. Failure to inform your insurance company or representative may result in denial of claims made after the initial 30-days of vacancy.
If a government mandate closes your business, you usually do not know when you can reopen. To keep your property risks as low as possible during this time, follow this guide to be sure you addressed important safety and security points:
- Dangerous goods should be in a secure location within your company. If possible, reduce your inventory of hazardous goods.
- Turn off any unnecessary utilities during your shutdown
- Remove all waste before closing and secure external waste bins
- Set your intruder alarm
- Check fire systems such as sprinklers and fire doors
- Inspect all physical security devices such as fences, locks, shutters, and gates
- Consider employing a security company to patrol the grounds periodically while your business is not operating
3. Cyber Insurance
Cyber insurance will not help recoup your pandemic-related business losses due to the mandated closure of your company.
However, this is a critical time to make sure your policy is sufficient. If your employees are working from home, your company is more vulnerable to a cybersecurity breach. You should contact your insurance expert to check the terms laid out in your policy. Additionally, your insurer may be able to offer some ways to strengthen your security.
Can I Get Any Assistance During and After the Pandemic?
All major insurance companies know that Australian businesses, especially the small and medium-sized, are suffering exceptional losses at this time. As a result, plans are going in place to defer payments of insurance premiums.
Additionally, eligible companies may receive refunds of unused premiums and have cancellation fees waived during and immediately following the pandemic.
The ACCC has an Authorisations Register to learn more about this assistance. The site also offers links to PDFs of applications.
We’re Here to Help
As the Coronavirus continues to affect our nation, the insurance industry is here to assist our customers as much as possible and help everyone to muddle through this challenging time.
** Please Note**
The content of this blog post is for informational use only. Insurance coverage varies based on numerous factors, and a single article cannot encompass all potential facets of an insurance policy. Remember this blog post should not take the place of professional advice from an expert in the insurance industry.