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Businesses urged to challenge insurers ‘trying it on’.

We are dealing with dozens of new cases where claims have been refused by insurers.

The Association of British Insurers (ABI) says individual cases are looked at on merit.

But it says most policies will not cover pandemics.

It argues that forcing insurance companies to cover risks not included in 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 organisation argues that business insurance is available for day-to-day problems like damage to premises or accidents and injuries.

‘We have been pretty incensed’

According to the BBC, Cerys Furlong owns the Grange pub in Grangetown, Cardiff, and was forced to close down on 20 March. She also owns the Milkwood restaurant in Pontcanna and the Lansdowne pub in Canton, both similarly affected.

She lost stock but still faces the costs of upkeep and also the costs of reopening, whenever that will be. The business was insured – including business interruption insurance – but Ms Furlong has struggled with getting help from her insurance company so far.

She calculates she has already lost tens of thousands of pounds.

“We’ve got specific clauses in some of our policies which should cover us for outbreaks of infectious diseases and government closedowns but despite that we’ve been told we’re not covered so far which is extremely disappointing and unhelpful,” she said.

What is business interruption insurance?

It covers financial losses of businesses during periods when they cannot trade as usual, due to an unexpected event. But some businesses, forced to close due to Covid-19, have been told by their insurers that they are unable to claim despite the UK government indicating that insurers would pay out.

Who is being affected?

Businesses affected include food and drink, retail, accommodation, and leisure. But the policies can vary significantly, so the advice is that business owners understand what they are really covered for.

How can cover vary?

A basic policy might only cover property damage, such as fire, and is unlikely to cover Covid-19. Actual damage to premises from the virus is hard to prove. Some business interruption policies provide broader cover and contain non-damage extensions for notifiable diseases and infectious diseases, or denial of access.

A notifiable infectious disease extension will typically apply if a disease is found on the premises, or within its vicinity. A denial of access extension will typically apply if you are required to close your business – this happened on 20 March so you may be covered depending on the wording of your insurance policy.

What do I need to do?

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