UK govt helps on-trade claim insurance over coronavirus

17th March, 2020 by Melita Kiely

The UK chancellor has guaranteed a £330 billion (US$398bn) package of loans and grants to help businesses during the coronavirus outbreak – and assured it would allow firms to claim against insurance policies over pandemic losses.

Rishi Sunak budget

Chancellor Rishi Sunak has promised a £330bn support package to help businesses through pandemic

Chancellor Rishi Sunak said in today’s (17 March) daily televised coronavirus update in the UK, that the £330bn was equivalent to 15% of UK GDP.

Sunak’s new measures mean venues with pandemic insurance cover will be able to claim insurance. For those without insurance, Sunak announced cash grants of up to £25,000 (US$30,000) to support them while members of the public have been advised not to attend pubs, clubs and social venues.

He said: “Following the changed medical advice yesterday, there are concerns about the impact on pubs, clubs, theatres and other hospitality, leisure and retail venues.

“Let me confirm that, for those businesses which do have a policy that covers pandemics, the government’s action is sufficient and will allow businesses to make an insurance claim against their policy.

“But many of those businesses don’t have insurance – so we will go further. I announced last week that for businesses in the retail, hospitality and leisure sectors, with a rateable value of less than £51,000 (US$61,000), they will pay no business rates this year.

“Today, I can go further and provide those businesses with an additional cash grant of up to £25,000 per business – to help bridge through this period.”

A 12-month holiday on business rates will also be extended to all companies within the hospitality sector, as well as retail and leisure.

Sunak said he hoped the loans and grants outlined today would be available from next week.

“That means every single shop, pub, theatre, music venue, restaurant – and any other business in the retail, hospitality or leisure sector – will pay no business rates whatsoever for 12 months, and if they have a rateable value of less than £51,000, they can now get a cash grant as well.”

On social media, Wine and Spirit Trade Association (WSTA) chief executive Miles Beale welcomed the government’s support, but said the industry needed “urgent clarification that measures will be extended to hospitality suppliers. Measures are mostly loans. We need to see income support for hospitality sector’s employees.”

More support needed

Leading on-trade professionals have called for more action to ensure the hospitality industry is fully supported to survive the pandemic.

Martyn ‘Simo’ Simpson, owner of London whisky bar and shop Milroy’s of Soho, said: “The business rates-free period is a step in the right direction but it is not enough. Borrowing money is great to plug cash flow holes but we will have to pay it back eventually, which will be compounded by the fact it will take a long time for hospitality to get back to normal after this crisis.

“What they have done is told the whole country not to go bars and restaurants – which we all agree with – but because they have not told us to shut we have no legal mandate to do so and can’t claim on our insurance for loss of business.

“We also have no legal reason to ask for a rent-break from our landlords. They are relying on good faith to get us through, which just isn’t enough.

“The government’s idea is increasing debt to help with cash flow but a £25,000 grant doesn’t cover rent and wages for three to four months in any London bar or restaurant.”

Insurance claims

CBD-cannabis-Cocktails

The UK has been advised to stay away from bars and pubs during the covid-19 pandemic

On Monday (16 March), the UK government was criticised for urging members of the public to avoid pubs, clubs and social venues during the coronavirus pandemic without sufficient support in place.

In response, hospitality industry members called on the UK government to formally order on-trade establishments to close so they could activate their insurance policies, and limit the potential danger of being forced to close for good or unable to pay staff.

However, leading insurers and trade bodies have warned many won’t be covered for the effects of covid-19 – even if the UK government orders businesses to close to stop the spread of coronavirus. That’s because usually, business interruption policies tend to specifically list the diseases they cover.

Insurance provider Axa said on its website: “As coronavirus was unknown until recently, there will be very few policies that cover it. There are some policies that cover compulsory closure caused by any notifiable infectious diseases; however, the vast majority list specifically the diseases they cover.”

The Association of British Insurers (ABI) issued a statement supporting Axa’s claims.

The ABI said: “Irrespective of whether or not the government orders closure of a business, the vast majority of firms won’t have purchased cover that will enable them to claim on their insurance to compensate for their business being closed by the coronavirus.

“Standard business interruption cover – the type the majority of businesses purchase – does not include forced closure by authorities as it is intended to respond to physical damage at the property, which results in the business being unable to continue to trade.

“A small minority of typically larger firms might have purchased an extension to their cover for closure due to any infectious disease. In this instance, an enforced closure could help them make the claim, but this will depend on the precise nature of the cover they purchased so they should check with their insurer or broker to see if they are covered.”

The UK government said if demand is greater than the £330bn promised, it would go further and provide “as much capacity as required”.

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