Coronavirus: insurance coverage will depend on contract terms

Out-Law News | 04 Mar 2020 | 4:58 pm | 2 min. read

UK businesses should check their insurance policy wordings carefully to find out if they are protected against coronavirus-related disruption, an expert has warned.

Recent news coverage about the designation of coronavirus, officially Covid-19, as a 'notifiable disease' by the UK government highlights the inconsistencies in the way in which different insurance policies deal with this type of disruption, according to Ben Hilary of Pinsent Masons, the law firm behind Out-Law.

"Understanding whether they have relevant insurance cover is likely to influence businesses in the actions they take to contain the spread of coronavirus," said Hilary. "Businesses may look for cover under a number of different products such as business interruption cover or directors and officers insurance when considering, for example, whether to cancel planned events or to limit staff movement."

Ben Hilary


Some insurance policies exclude infectious diseases explicitly, whilst others are conditional upon a public body declaring either that the outbreak amounts to a pandemic or is a 'notifiable disease'.

"However, whether losses caused by coronavirus are covered will depend on the specific terms of each policy. There is no consistent industry-wide approach to how policies deal with pandemic illness. Some policies exclude infectious diseases explicitly, whilst others are conditional upon a public body declaring either that the outbreak amounts to a pandemic or is a 'notifiable disease'. For businesses, it is important that they review their insurance cover to understand whether losses relating to the coronavirus are covered at an early stage," he said.

This morning the BBC reported that the UK government was yet to declare coronavirus a 'notifiable disease' in England and Wales, which is where medical professionals must report suspected cases to public authorities immediately. The Scottish and Northern Ireland governments did so last month, while the Ireland and Guernsey did so earlier this week.

The UK government has since confirmed that coronavirus will be added, although it is yet to appear on the published list.

The World Health Organisation declared the virus a public health emergency of international concern (PHEIC) on 30 January. It has since raised its assessment of the risk of global spread and risk of global impact to "very high". However, the virus has not as yet been declared a 'pandemic', which is a term used to describe an infection disease which has spread globally.

Hilary said that insurers providing products likely to be affected by coronavirus, such as travel insurance policies, should make sure that their claims teams were fully briefed on whether their policies would cover coronavirus-related losses and in what circumstances.

"Claims arising from coronavirus have the potential to be complex in nature so ensuring claims teams understand the current status of the disease, and how policies respond to it, will be important in advising policyholders and assessing claims," he said.

Travel insurance providers which are members of the Association of British Insurers (ABI) have made a number of public commitments intended to address the concerns of customers due to travel overseas. They include commitments to direct customers to routes to claim compensation for cancelled transport or holidays; considering all valid travel insurance claims for costs not recoverable from elsewhere quickly and fairly; putting business continuity plans in place; and considering appropriate alternative evidence where standard medical certification is unavailable.