A law firm says that Welsh companies affected by the coronavirus could legally challenge the insurance companies that rejected the claims.
The capital law deals with dozens of new cases in which it says claims have been denied by insurers who “try it first”.
The Association of British Insurers (ABI) says that individual cases are examined on merit.
But he says that most policies will not cover pandemics.
He argues that forcing insurance companies to cover risks not included in the contracts would bankrupt them.
The ABI says it has already been accepted by the Financial Conduct Authority that pandemics are not covered by most insurance policies.
The organization maintains that commercial insurance is available for everyday problems such as damage to premises or accidents and injuries.
“We were quite exasperated”
Cerys Furlong owns the Grange pub in Grangetown, Cardiff, and was forced to close on March 20.
She also owns the Milkwood restaurant in Pontcanna and the Lansdowne pub in Canton, both also affected.
She has lost inventory but still faces maintenance costs and also reopening costs when that happens.
The business was insured – including business interruption insurance – but Furlong has struggled so far to get help from her insurance company.
She calculates that she has already lost tens of thousands of pounds.
“We have specific clauses in some of our policies that should cover us for infectious disease outbreaks and government closings, but despite this, we have been told that we are not covered so far, which is extremely disappointing and useless, ”she said.
She added, “We pay thousands of pounds a year in insurance policies every year – it’s not something we claim or expect to claim.
“I think the attitude has been that unless the words” coronavirus “or” Covid-19 “are written in your policies, then you’re not covered.
“Well, no one knew what it was until it happened. We were initially reasonably confident that we would be covered, but we were quite exasperated by the response we have had so far. “
The insurance company has so far refused to pay without proof of specific incidents on the premises.
Furlong said after hiring lawyers there was more dialogue but she was frustrated that others were unable to take legal advice.
She said people need to take a hard look at their policies, talk to other small businesses, and see what you can learn from others.
“The difficulty is the unknown – when we can start trading again. It’s worrisome as a small business – we’ve only been open for three years and we’ve just started.
“We are confident that we will reopen and we will be in the best position to do so. But we appreciate that every business, organization and individual is affected. “
But Cardiff’s capital law says some insurance companies are taking an “irresponsible global view” and rejecting claims when they have already paid.
Lawyer Guto Llewelyn said he had seen a change in attitude on the part of insurers in cases where they would pay normally but use delaying tactics or “try”.
“We have seen dozens of companies based in Wales and across the border in England facing huge disruption in their business but facing the denial of insurers who refuse coverage at the first opportunity “, did he declare.
But there have already been cases where insurers have changed their position after being challenged.
What is business interruption insurance?
It covers the financial losses of companies during periods when they cannot trade as usual, due to an unexpected event. But some companies, forced to close due to Covid-19, have been told by their insurers that they cannot claim despite the British government saying the insurers will pay.
Who is affected?
Law firms say the affected businesses include food and beverage, retail, accommodation and recreation. But policies can vary widely, so the advice is that business owners understand what they are really covered for.
How can coverage vary?
A basic policy only covers property damage, such as fire, and is unlikely to cover Covid-19. The actual damage caused to the premises by the virus is difficult to prove. Some business interruption policies offer more coverage and contain harmless extensions for reportable and infectious diseases, or denial of access.
A reportable infectious disease extension will generally apply if a disease is detected on or near the premises. A denial of access extension will generally apply if you need to close your business – this happened on March 20, so you may be covered depending on the wording of your insurance policy.
What do I have to do?
Contact your insurer as soon as possible and start preparing your claim, including noting key events, such as the closure, details of your current operations and the details of anyone who had Covid-19 on the premises. Make sure you respect all the conditions of non-occupation or vacancy.