Business Interruption Insurance Explained

Find Out How Chris Rudd Solicitors Can Help
May 20, 2020

Many businesses across the country remain shut down due to COVID-19. Despite the furlough scheme providing up to 80% of staff wages, for a lot of businesses there is still a great loss of revenue.

An essential part of business is managing risk, so you may have business interruption insurance in place. Unfortunately, some big insurers are not paying out.

Insurance policies will set out whether business interruption will be covered in respect to COVID-19, though different insurers may label or word it differently. Disagreements and disputes come from the specific wording – only certain types of diseases may be covered, or only if there is infection on your business premises, or only if your business is closed by a public authority, for example.

How your policy is worded should dictate whether you are covered by your insurance for closure due to COVID-19. But, because of the uncertainty of the unprecedented situation in the UK, your insurer may be reluctant to pay out to your business.

If that is the case, and you believe you are entitled to an insurance payment, please get in touch. We can review your insurance policy and advise on two key things:

  • Whether you have business interruption insurance, and
  • Whether your policy will cover effects of the COVID-19 pandemic

We can then help you make a claim to your insurer for the pay-out you are owed. Call us on 01925 351 350 to speak to an expert and find out more.

Call for legal advice on remote will drafting during the lockdown

Making A Claim

You can’t go straight to claiming against your insurer if they haven’t paid you – there are a few steps to go through first.

  1.  You will firstly need to submit a claim on the insurance policy. If you’d like advice on how best to do this, we can help for a fixed fee of £195 + VAT.
  2. If the policy claim is refused, you must be given written refusal with reasons given.
  3. A legal claim arises if your insurer refuses to pay out for BII, when we believe the contract of insurance does cover the situation and that you are deserving of a pay-out.
  4. Before making a legal claim, you will need to submit a claim notification under your policy.
  5. We would then bring a claim against your insurer for breach of contract.

If you have been refused a pay-out by your insurer and believe you can make a claim, please give us a call on 01925 351 350. We can review your policy and advise on whether you are able to make a claim. And, we may be able to proceed on a no win no fee basis to run your claim for you.

How Much Can You Claim for From Business Interruption Insurance?

Your individual policy should set this out, but most often this will be assessed on a gross profit basis with a prediction of likely profits in the coming year. Your policy should set out a limit of indemnity, which is the maximum pay-out you can receive. Typically, this is around £25,000.

What If You Own A New Business?

For young companies and businesses, you might not have the trading history that other businesses due, so you might not be able to predict likely profits for the year. In that case, an assessment will likely be made based on industry and market trends, as well as looking at similar businesses.

How Much Will It Cost to Claim for Business Interruption Insurance?

There are several funding options available for your claim, and we will always try to work for what is best for you. We may be able to work on a no win no fee basis, or no win low fee. Or, we may be able to negotiate with an external litigation funder, to take the pressure off you.

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