Business interruption policies generally pay up to £ 100,000 to cover the costs of keeping a business in business if it is forced to close for reasons beyond its control. These include floods, fires or even when murder prevents the site from opening.
Business owners have filed claims with Hiscox and other commercial insurers in recent days, only to be told that their policies do not cover the pandemic.
Last week, the Financial Conduct Authority told insurers to suspend payment of dividends to allow them to pay claims. He had previously told insurers that he expects them to treat customers fairly.
A group of brokers and adjusters have joined the forces and will ask a lawyer to review the policies with a view to prosecuting them.
The Hiscox Action Group said company policies clearly state that they will pay where the business interruption was “due to restrictions imposed by a public authority following the occurrence of reportable human disease mandatory “.
Other insurers, including Eaton Gate, have similar conditions and are expected to face similar legal action in the coming months, the group said.
Alan Dexter, who runs four restaurants in Glasgow, including Barsa Tapas, said two of his premises were covered by Hiscox, but his requests were rejected last week. He was forced to put his 140 employees on leave because of the crisis.
Dexter said, “Our broker pointed out that the coverage states that we can claim in the event of a reportable illness, and, in my opinion, the police seem to cover the exact situation in which I find myself, as well as many other owners. corporate, but. taking several days, Hiscox returned last week and said it would not pay our claim. The company presents itself in its advertising material as the insurer who always pays, but this is not my experience. “
Roger Topping, who runs TopMark Adjusters, a Glasgow-based insurance adjuster and one of the founders of the court challenge, called on insurers to pay or get the government involved.
Topping said, “We have heard ministers tell insurers to pay these claims but, to my knowledge, no insurer has broken ranks and paid a claim. It’s not just a problem Hiscox, several other companies, including Eaton Gate, an insurer supported by the Royal Sun Alliance, are in a similar position. It appears that the massive losses involved have prompted the insurance industry to look for reasons for not paying. “
He called on government and insurers to find a solution before “a multitude of lawsuits against insurers start and massive amounts of money are wasted on legal fees.” We need something along the lines previously adopted for complaints about riots, floods or what we saw in Northern Ireland at the height of the unrest. “
Hiscox said, “We understand that these are incredibly difficult times for the companies affected by Covid-19. At Hiscox, we strive to pay claims covered by policies fairly and promptly.
“However, the general business interruption policies in the industry, including at Hiscox, were not designed to cover these extraordinary circumstances. Like terrorism and floods, which have government-backed insurance plans, pandemics like the coronavirus are just too large and too systemic for private insurers to cover them, “he added.
Last month, the British Insurance Association told the parliamentary affairs committee that few companies would be protected from loss by their insurance policies.