The wide reaching implications of the current pandemic mean that it is very difficult to say with any certainty how a court will deal with some of the issues arising. It is possible that the government will look to legislate to provide relief in circumstances where the courts would otherwise determine liability and/or that the courts will address issues in line with a wider public policy stance.
Nevertheless, as the Covid-19 pandemic continues to cause widespread disruption, including closure of premises, and cancelled events and contracts, businesses need to consider the terms of any insurance policies that they may have in place. The impact of the pandemic is not just business interruption, but also an increased risk of dispute as parties find themselves unable to fulfil contracts or without the goods and services they need and to which they are contractually entitled. Most businesses will have employer and public liability insurance. Some may have professional indemnity and business interruption insurance. It is often the case that businesses will have a basket of insurance cover, the specific scope of which they will not be fully aware of or understand. It is always worth checking your insurance cover, and doing so as soon as possible.
If you potentially have cover, it is vital to ensure that you comply strictly with all of the insurance policies’ terms. Failure to do so may lead the insurer to reject, lawfully, a perfectly legitimate claim.
The first and perhaps most important of those obligations is prompt notification. Most insurance policies will include a requirement that you notify the insurer as soon as you acquire knowledge of a matter that may or will give rise to a claim. Bear in mind that from an insurance claim perspective, government ‘advice’ to do or not to do something may not have the same effect as a strict prohibition, so err on the side of caution, and notify your insurers if you think, for example, that adhering to the government advice may give rise to a claim. If the insurance policy prescribes a notification procedure, it must be followed to the letter even if, on the face of it, it falls outside the normal channels that you use to communicate with your insurer or broker. If in doubt copy the notification to multiple parties.
It is also important to gather evidence that may support your claim at an early stage and before relevant documents are lost, and memories fade. That evidence will not only support your claim but it will help you comply with an obligation commonly found it in insurance policies, namely the obligation to actively co-operate with the insurer by providing the documents and information that the insurer requests.
It is also advisable to enlist the assistance of the insurance broker that obtained the insurance in the first place (if you used one). They will be able to advise on how best to present what may be complex claim and they may be able to apply commercial pressure on the insurer, which is not available to you.
Finally it is important not to exaggerate the value of any claim. Exaggeration may lead the entire claim to be rejected including those losses which were unquestionably incurred and covered.
Needless to say, this briefing note is not and is not intended to be professional legal advice. It merely sets out some general matters to consider. The position in each case will turn on the facts and the terms of any policy, and you should make sure that you seek specific advice in each case from your usual contact at Clintons.