Catrin Povey, who leads the insurance practice at UK law firm Capital Law, says businesses across the entertainment industry that have been impacted by the coronavirus should double-check their business interruption insurance policy and make a claim before it’s too late.
Business interruption insurance is intended to provide cover for financial losses caused by unexpected events that cause damage to insured property, resulting in interruption to business operations. There can be no doubt that this unexpected pandemic has interrupted businesses in the entertainment industry, with venues such as cinemas, theatres and concert halls all having been forced to close by the government in many countries.
So although insurers have been reluctant to pay out, businesses should not take their insurers’ denial as final. Every policy is unique; a successful claim depends on the exact terms of your policy. Often, there is enough ambiguity in the wording of the policy to argue that a claim is possible.
Here are a few extensions to look out for in your policy:
Where you have had a confirmed case of COVID-19 on (or within a certain perimeter of, depending on your wording) your premises, after the virus was officially recognised as a notifiable disease, then you may be able to claim under a disease extension. Cover here is generally provided in situations where businesses have had, or are at risk of having, a highly contagious disease arise on their premises.
An exhibition sites extension may also be used to claim. These extensions provide cover for interruption resulting from damage at any exhibition site where you were exhibiting goods or services. For example, if you were due to hold a performance or to attend an exhibition at a venue and interruption has been caused to your business as a result of their cancellation, a claim may be possible.
Denial of access
High contamination risks in the entertainment industry have resulted in the forced closure of businesses in this sector, who therefore may be able to claim business interruption insurance through a denial of access extension.
This extension provides cover for closure or restrictions on the business premises following the actions or advice of a public authority as a result of a public emergency that is likely to endanger life or property. On 30 January 2020, WHO declared the COVID-19 pandemic a Public Health Emergency of International Concern (PHEIC), so its emergency status cannot be contested.
Next steps for those in the entertainment industry
Businesses must act now, and the first step is to notify your insurer that you would like to claim. If you are unsure about the claim, get your policy reviewed by a professional. Showing that you have mitigated your losses is also key. One such example of this is the Old Vic streaming, a performance where viewers are asked to pay to watch online. Evidence that you have taken action to reduce interruption to your business may increase the chance of claim.
Most policies contain claims conditions in order for claims to be possible, such as when you must notify your insurer of a claim. It is hoped that insurers will relax these conditions given the current climate, but the worry is that, for many businesses, it is now too late. We recommend that you take action immediately.
All advice courtesy of Catrin Povey of UK commercial law firm Capital Law