The small print has been more apparent these days, especially as businesses battle the challenges created by trying to stay financially afloat in what is almost a global lockdown. Made all the more problematic as we are discovering that, despite paying insurance brokers and companies hefty premiums year on year without claims, now that businesses need to rely on their insurance policies they are full of holes, ambiguities and are now experiencing blank refusal to pay up. Some industry sectors are far more likely to struggle to survive and urgently need their insurers to honour their insurance policies. The government schemes may not be able to be accessed by this sector. Also, as we have seen as the crisis has unfolded, the banking sector has been slow to assist in some circumstances.

The hospitality industry is the front line in one of the most testing situations as the opportunity to generate even a small amount of business is severely limited. New research reported in Boutique Hotelier has revealed that two thirds of hospitality companies believe they will not survive a prolonged lockdown without further far-reaching support from government. The study by KAM Media, which involved 211 hospitality companies – ranging from businesses operating pubs and bars to restaurants, cafes and street food venues – showed that 66% of businesses do not think they can survive a further three months of lockdown measures.

Many business organisations across various sectors are attempting to help their members fight claims against their insurers and there is a wide potential for class actions across a number of industry sectors to force the issue. Legal Law Limited’s litigation teams, as well our insurance and reassurance teams are inundated with enquiries from businesses requesting assistance in enforcing their legitimate insurance claims relying on business interruption, force majeure and other clauses.

Pubs, nightclubs and restaurants are shaping up for a challenge. Michael Kill, chief executive of The Night Time Industries Association, which represents bars, nightclubs and hosts of live music concerts stated “There are a considerable number of businesses who are being denied valid insurance claims, being disputed by certain insurers in the hope that the current financial situation will deter them from challenging the claim,” he said. “These actions have not gone without notice and will be challenged at a greater scale in the coming weeks.”

Some of the most highly regarded insurers are attempting to avoid acknowledging that business interruption clauses apply in the case of the coronavirus. The solicitors in Legal Law Limited’s London based litigation team point out that a considerable number of insurance policies include clauses that specifically refer to losses arising from closure resulting from an outbreak of a virus or bacteria. Also, many offer cover for any “notifiable disease” outbreak, a disease required by law to be reported to public authorities, coronavirus became a notifiable disease in the U.K. on March 5 2020. There are precedents from previous issues in the past such as Ebola and SARS that will provide a legal action, particularly class action, with significant fire-power to win the day.

Restaurants, hotels and nightclubs etc. are very aware of the risk that communicable diseases pose to their businesses and often an extension clause is added to an insurance policy providing cover for “an occurrence of any human infectious or human contagion disease.” Furthermore, our litigation solicitors point out that business interruption clauses cover the consequences as well as the pandemic itself in that actions that have to be taken by the authorities in response to an infectious disease that effectively impedes a business, such as the Stay at Home Rules and certainly the compulsory closures of businesses, amount to actions that should invoke the “prevention of access clause”.

The obvious predicament for the insurance sector is the scale of the losses which is causing even insurers considered to be principled, to attempt to take oblique routes to avoid honouring their policies and the clauses directly applicable to the current crisis. The insurance sector carries with it a reputation of wriggling out of liability where at all possible but now that it is facing a global pandemic the efforts to do so are being employed with even more vigour than usual. Legal Law Limited’s litigation and insurance and reassurance teams are working together to unpick the small print in our clients’ policies and compel the insurance companies to honour their policies.