COVID-19 Insurance – are you covered?

Category: COVID-19Leisure - Posted On: Jan 19 2021


The long-awaited judgement by the Supreme Court on the Financial Conduct Authority’s (FCA) business interruption test case was delivered on Friday 15 January 2021, allowing the appeal on behalf of policy holders. This completes the legal process for impacted policies and means that thousands of policyholders will now have their claims for coronavirus-related business interruption losses paid.

Coronavirus has caused substantial loss and distress to businesses in the leisure and hospitality sector, and many are under immense financial strain to stay afloat, having seen most of their turnover and profits all but disappear over the past 10 months. Whilst Government grants and loans have helped many survive, the ability to submit a business loss interruption claim may provide the vital funds and working capital required to allow them to weather the next few months and position themselves to reopen when restrictions allow.

With businesses often paying significant business insurance premiums, the ability to now submit a claim for loss interruption with the hope of it being paid out makes the process far more positive. However, the level of information required for the claim will vary from policy to policy but from our experience the following is generally required:

  • A detailed description of the business activity. For a hotel this would include total number of rooms split by class, restaurants and bar functions, average occupancy rates, average length of stat and guests per room.
  • Actual & (pre-loss) profit and loss account on either monthly, quarterly or annual basis. Again, on an enterprise level (rooms, food and drink, function hire etc.)
  • Re-calculated prepared forecasts on a monthly, quarterly or annual basis based on actual earnings
  • Detail of monthly fixed costs (payroll, rent etc)
  • Details of future bookings across all enterprises
  • Copies of communicating with customers and suppliers
  • Detail of Government support (grant, loans & rate relief) received to date

The above list is not exhaustive but highlights the level of detail many insurance providers request before they evaluate any claim. Accurate and up to date accounts and bookkeeping information will be crucial in establishing your case and therefore you should speak with the relevant advisors to position the business in the best possible place to make a robust claim.

Although the ruling doesn’t ensure your claim will be successful, we would recommend you contact your insurance company or broker to discuss your policy. We expect most insurance companies will be inundated initially, and in some cases, you may not get the response you want. However, we suggest you remain persistent and discuss with your professional advisors on how best to proceed.

Our EQ Leisure team can offer support to ensure your information is complete before submitting your claim. If you’d like our advice or assistance, please get in touch to discuss your circumstances by calling one of our offices or emailing leisure@eqaccountants.co.uk.