How COVID-19 is impacting insurance policies - what you need to know

Through the connection Mazars Qld have with Ausure Insurance we have summarised the different types of insurance that may be impacted by COVID-19 and key points to keep top of mind:

Business Insurance

If you have closed the doors at your business premises you may need to discuss with your insurer what the conditions are in your policy regarding “unoccupancy” of your premises. Most property policies will apply reductions in the level of cover if your premises has been unoccupied longer than a certain period. Some policies will cease to provide cover altogether. Ensure to discuss this with the insurer prior to the designated period as it’s much more difficult to get an insurer to backdate this type of change to your cover

Business Interruption Insurance

Insurance policies typically do not respond to a loss of revenue/gross profit claim due to an outbreak of a Notifiable Disease leading to the closure of your premises or of your Customers/Suppliers. Do not expect a positive response from your insurers to any claims relating to the downturn in business revenue or loss of profits. However, it is important if you are looking for premium relief you do not cancel this cover as it will still apply if you have any other claimable incidents such as Fire, Vandalism, Storm, Theft, Water Damage just to name a few

Corporate Travel Insurance

Most insurers have now issued releases advising that any new travel being booked will be uninsured for either medical claims or cancellation/curtailment claims relating to COVID-19/CoronaVirus. Reassess all your needs to travel in the coming months. Again, reconsider the need to cancel the coverage if you are looking to reduce your premiums. As with Business Interruption Insurance it’s vital you retain coverage for other events if you wish to lodge a claim. Any trips already booked that are yet to be cancelled will still be covered for Cancellation/Curtailment of other events such as illness/injury to the insured traveller/s or their immediate family.

Commercial & Residential Investment Properties

Some Commercial Properties and most Residential Landlords Insurance policies include coverage for Rent Default by Tenant. Most policies will not have any exclusions relating to COVID-19 and some include coverage for Loss of Rent when a Tribunal or relevant authority declares Hardship on the Tenant. If you don’t currently include Rent Default Coverage on your policy speak to your insurer as soon as possible to have this cover included. Also ask them to clarify the requirements for lodging a claim, this may be difficult if you are unable to evict tenants who are not paying their rent.

Management Liability Insurance

We expect a number of businesses in most sectors will be suffering some hardship from the current crisis and as such will need to stand down or offload staff to survive. In any environment where there is a need to dismiss staff the business is at risk of wrongful dismissal action taken against them. This can be covered under a Management Liability coverage section named Employment Practices Liability. This can in certain circumstances provide coverage for legal expenses and penalties associated with these actions. Many of these policies also include coverage for Workplace Health & Safety reviews and penalties where there are concerns regarding the business not providing a safe and fair working environment.

Trade Credit Insurance

We would expect many businesses and operations are going to be impacted greatly during this period and would expect a number of businesses to be at risk of closing down. If you supply to your customers with credit terms you may be eligible to insure these debts through Trade Credit Insurance. Whilst any trade already conducted would be impossible to insure, you may be able to insure these debts moving forward.

Construction/Contract Works Insurance

Most of these policies have cessation of work exclusions/conditions. If you stand down from a contract for a period of greater than 30 days (60 days on some policies) all coverage for that job ceases both for Material Damage claims and Public Liability. It is vital to discuss this clause with the insurer as soon as cessation happens to ensure you don’t lose cover.

When change happens and unforeseen events occur it’s important to speak to an insurance broker about how your insurance policy will be affected and make sure that you are covered. Your insurance broker should be regularly reviewing your policy but it’s best to stay on top of it all by checking in with your broker, communicating any changes and ensuring that you are covered.

If you are unsure what your insurance policy covers or would like to make some additional inclusions, please speak to your usual Insurance broker or alternatively contact Trent Cornford from Ausure Insurance on 0422 391 183.

Published: 7/4/2020

Please note that this publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice.

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