Small Business Insurance During COVID-19

Understandably, the COVID-19 outbreak is proving to be a difficult time for many small businesses and the self-employed.  Larger businesses and corporations will be more likely to keep working – albeit remotely – through the COVID-19 crisis, while small businesses are more likely to suffer due to enforced closures. As such, uncertainty about their immediate financial future has swelled in the face of mandatory non-essential business shutdowns by the UK government.

The following FAQs regarding self-employed insurance and small Business Insurance should hopefully help to alleviate some of this confusion and help those who own or work for small businesses to figure out what their next financial move should be.

What financial support is available for small businesses and the self-employed?

On 26^th March 2020, the UK government announced a ‘rescue package’ for the self-employed facing financial difficulties as a result of COVID-19 causing their business(es) to be shut down. In a similar fashion to furloughed employees of larger companies, the self-employed will be able to get 80% of their monthly wages covered by the government.

This taxable grant will be worth 80% of a self-employed worker’s earnings over the last three years, capped at £2,500 a month. As long as they have filed a tax return for the year of 2019, the scheme will benefit 95% of the self-employed earning up to £50,000 a year.

However, the rescue money will not start being deposited into these workers’ bank accounts until the start of June at the earliest. This has become a point of contention for many self-employed workers owning shut-down small businesses, as many of them may struggle to afford basic necessities for themselves and their families until that first rescue payment arrives.

Should you feel the need to claim this government grant, more information on how to apply and the requirements to do so can be found on the UK.Gov guidance page.

Is COVID-19 covered by my business insurance?

Although COVID-19 and its effects, such as self-isolation, are unlikely to be specified within the Business Interruption section of your business insurance policy, there are other areas of your insurance policy wording that you should check:

• Notifiable Diseases/Murder, Suicide and Disease: Some small business insurance policies may cover enforced closures to your business as a result of significant infectious diseases. While some policies will provide a named list of such diseases that they are able to cover, COVID-19 is generally unlikely to appear in any such listings due to the recent rise to prevalence.
  
  However, some policies will instead cover on a “non-specified” basis where the wording instead reads “any notifiable disease” or similar phrasing. COVID-19 is more likely to be covered under this wording as it is certainly now a notifiable disease due to the number of business closures that have been enforced by the UK government.
  
  Losses accrued as a direct result of such a closure due to COVID-19 would then possibly be covered up to a limit that should be stipulated by your specific policy.
  
• Denial of Access: If your policy contains a Denial of Access extension to its Business Interruption section, it is possible that COVID-19 closures to your business may be covered.  The wording needs to include a “non-damage” clause, as a Denial of Access extension will usually apply only when physical damage prevents access to business operations.
  
  If the “non-damage” wording is present, then you may potentially be able to make a claim should you feel it is necessary.

In the event of wishing to make a claim on either of the above conditions. you should contact your insurance company. Brightside is an insurance broker and not the insurance company.

Will my public/employers’ liability insurance cover me for staff sickness due to COVID-19?

If you own a small business and hire employees, you should already have the required Employers’ Liability insurance policy. A typical Employers’ Liability insurance policy in the UK will have few exclusions relating to the potential for employees to claim against you, their employer in the unlikely event of their injury or loss being as a result of your negligence or "failure to act". As such, if any claims are made on this compulsory insurance, insurers will be obligated to pay them.

It is important to understand that if you’re staff are, or have been “off sick” during the COVID-19 lockdown (for any cause), unless this can be directly attributed to your negligence as an employer, then their salaries or wages are not covered by your Employers Liability policy. If staff have suffered a physical or financial loss as a result of your failure to act as a responsible employer, then your Employer Liability insurer will respond to a claim made by the employee or their agent (usually a lawyer). This is not cover from which you can gain benefit. 

If there is any potential for financial recovery from your business, your insurer would consider that depending upon the circumstances and apparent wilfulness of any negligence or failure to act on your part. So the best way to ensure that your business’s employers’ liability insurance policy will cover you, is to make sure that the appropriate health and safety guidelines pertaining to COVID-19 have been and continue to be followed diligently. The relevant COVID-19 health and safety steps for businesses to follow can be found on the UK Government website

With Public Liability insurance, policy wordings are unlikely to contain exclusions specifically concerning pandemics. As with Employers’ Liability insurance, insurers will look at whether there were wilful violations of the reasonable care conditions and may refuse coverage on a claim as a result. Once again, managing your business with HSE requirements for your trade activities and/or Government Guidelines during COVID-19 is clearly the best way to ensure you protect your business, your employees and your customers.