Following the COVID-19 pandemic, many businesses turned to their insurance broker for advice on how to claim losses under their business interruption policy. The pandemic was classed as a ‘force majeure’ and therefore most claims were instantly dismissed. A decision which frustrated many business owners.
However, in some instances, there was a part of the policy under which a claim for COVID-19 related business interruption losses could have been maintained called the “Denial of access (non damage) cover” which (in summary) provides cover for losses resulting from denial of access to business premises arising from actions by the police or any other statutory body in response to a “danger or disturbance” at the business premises or within a 1 mile radius.
Subsequently, in a test case judgment, it was stated that clauses of this sort provide only a narrow form of cover for incidents such as a bomb scare or gas leak which cause the authorities to evacuate the insured premises. It was stated that such a cover would not extend to losses arising from the imposition of regulations in response to a pandemic.
However, in a more recent case “Corbin & King Ltd & Others v AXA Insurance UK plc” – the Judge stated that the relevant cover was capable of extending to disease, and that one or more cases of COVID 19 within the 1 mile radius could constitute a relevant “danger”.
As a result of this new decision, Blythin & Brown has been informed that AXA will now consider claims involving the clause in question and will now be considering any claim for COVID-19 related business interruption losses in accordance with the recent judgment, together with relevant policy terms, conditions, and limits.
Whilst we will be contacting our clients directly, this decision may mean that other insurers may have to follow suit and consequently other businesses may have grounds to submit a claim for COVID-19 related business interruption losses.
However, businesses will have a responsibility to provide sufficient evidence of an occurrence of disease occurring within a 1 mile radius of their businesses premises prior to any Government action which is said to have caused restriction or hindrance of access to your premises and resulting interruption or interference with the business.
The FCA has published guidance for policyholders on the types of evidence and methodologies which policyholders may use when proving the presence of coronavirus in a radius around their premises, which may assist you in this regard. You can find the guidance:
The FCA business interruption insurance COVID-19 calculator, which can assist you in evidencing whether COVID-19 was likely to be present within the 1 mile radius at the relevant time, can be found here:
https://covidcalculator.fca.org.uk
Below is a list of the information that AXA will require from their policy holders in order to submit a claim. Whilst currently only AXA are considering claims, if you are not an AXA policy holder, gathering this information now may help expediate your claim if this decision sets the precedent that other insurance companies will have to follow.
Information being requested from AXA policy holders:
(1) An explanation of which Government action(s) caused a restriction or hindrance of access to your premises and resulting business interruption loss.
(2) Evidence to show that prior to each relevant Government action there was at least one new case of COVID-19 within a 1 mile radius of your premises. If you are relying on data from the FCA calculator, please provide print-outs or PDF copies of the calculator results.
(3) To the extent not already provided, information / documentation to demonstrate the amount of your claim including:
a. Copies of your company trading accounts for a period of 6 months prior to the loss.
b. The date that your business was first impacted by COVID-19 / Government actions.
c. Was your business closed entirely or did you continue to trade during the lockdown? If any trading has continued, what revenue has been generated?
d. Did you make any changes to your business as a result of this incident eg. furloughing of staff / business model?
e. Has the business made any other savings on regular expenses e.g. rent holidays/utilities?
f. Has the business been in receipt of any other Government funding that we should be aware of?
Claimants should note that AXA may appoint a Loss Adjuster or a Forensic Accountant to validate and value any claim and, as part of the claims validation process, AXA may need to request further relevant information and supporting documentation.
This is likely to be a complex and time consuming process as claims handlers will be under significant pressure as claims begin to get submitted and evaluated. Therefore we advise any business that believes it may now be entitled to claim to contact their insurance broker as soon as possible.