In light of the rapidly increasing number of Covid-19 cases worldwide, many businesses are facing interruptions to their business, for example, businesses’ suppliers are unable to fulfil their contractual obligations due to countries being placed on lockdown, meetings/events are being cancelled and businesses are being forced to close for an indeterminate period of time.
In such circumstances, businesses may naively believe that they will be covered by their insurance for such business interruptions on the basis that Covid-19 is a “force majeure” event. However, you may want to think again!
Force majeure may be defined as “an event or effect that cannot be reasonably anticipated or controlled”. In other words, it is an event that a person may not have foreseen.
Although businesses may not have anticipated a scenario like the Covid-19 pandemic, many insurance policies will have foreseen such a pandemic, particularly where there have been previous flu epidemics – albeit not to the scale of the Covid-19 pandemic.
Insurance policies may exclude and/or limit liability for such events, to include any direct or indirect losses caused to the business as a result of business interruptions.
However, some insurance policies provide for pandemic/epidemic coverage and businesses may be able to recover some and/or all of their losses incurred as a result of business interruptions, if they are covered for such scenarios.
We would advise all businesses to have their insurance policies reviewed at this time to establish what they are covered for and what they are not covered for, particularly where businesses may be able to recoup some and/or all of their losses by claiming through their insurance.
If you would like to find out more about how we can help you during the Covid-19 crisis, please contact us.
Kane Tuohy LLP,