Business interruption insurance - Policy checker

Progress: 0%

Do you have business interruption insurance?

Business interruption insurance often forms part of a 'package' of insurance that covers a range of commercial risks. 

You should check each of your policy wordings and your policy schedules to see if business interruption insurance is included. 

The policy may contain an index of the different types of cover, which can be helpful.  If you are unsure or do not have a copy of your policy wording, you should contact your insurer or your broker for help.

If your policy contains a statement similar to that below, it covers business interruption and you should answer 'Yes' to this question:

Progress: 10%

Was the policy in force when you suffered financial losses?

Check the policy period. This will be in your policy documents, probably in a ‘schedule’ or in your Insurance Product Information Document (IPID). Policies are usually written on yearly basis.

Progress: 20%

Does your policy include cover for business interruption losses that are not caused by physical damage to property? 

Many policies limit their business interruption cover to losses relating to physical damage to the premises, such as fire or flood. In most cases, these policies are unlikely to cover losses related to the coronavirus and are not within the scope of the FCA’s test case.

Check your policy to see if it has a clause covering business interruption losses that do not relate to physical damage to premises. These are sometimes called ‘non-damage’ clauses.

The FCA’s test case considered 3 types of ‘non-damage’ clauses. They are disease, prevention of access and hybrid clauses (‘hybrid’ because they cover losses caused by prevention of access following a disease). There is further guidance on each type of clause below.

In order to recover business interruption loss, you only need 1 ‘non-damage’ clause that provides cover. It is possible that your policy contains more than 1 ‘non-damage’ clause.

Types of non-damage cover

There are 3 types of non-damage cover that the FCA test case covers. You can find further information about them below.

Progress: 40%

Is your policy included in the representative sample?

The FCA’s test case is directly relevant to the 21 types of policy in the representative sample[6]. 

There are a number of questions you need to answer to identify whether or not your policy is included in the representative sample for the FCA’s test case.

Step A: Was your insurer a party in the test case?

To answer this question:

1. Identify the name of your insurer.

The following insurers were parties in the test case:

• Arch Insurance (UK) Ltd
• Argenta Syndicate Management Ltd
• Ecclesiastical Insurance Office Plc
• Hiscox Insurance Company Ltd
• MS Amlin Underwriting Ltd
• QBE UK Limited
• Royal & Sun Alliance Insurance Plc
• Zurich Insurance Plc

If your insurer is in this list, select Yes below.

2. If your insurer is not in the list above, you might still have a policy that is included in the FCA’s test case. This is because two policy types considered in the test case were underwritten by several insurers who were not parties to the test case in relation to that type of policy. They were:

• QIC Europe Limited insured ‘Eaton Gate’ branded policies sold by its ‘MGA’, Eaton Gate MGU Limited (which also trades under other names[7]). If you have this type of policy, your policy is similar to ‘RSA Types 2.1 and 2.2 of 4’ or 'RSA Type 3 of 4' in the representative sample. Please look at the wording of RSA Types 2.1 and 2.2 of 4 and RSA Type 3 of 4[14] to see if your policy has the same or very similar policy wording and continue through the policy checker on the basis of that policy wording type.
   
• AIG, Allianz, Aspen, Aviva, Axa, Chubb, Everest, Liberty, Lloyds, MS Amlin, New India, Protector, QBE, Tokio Marine, Tokio Marine Kiln Insurance, Zurich which insured Marsh/Jelf Resilience policies  sold by the broker Marsh (which also trades under other names[8]). If you have this type of policy, your policy is similar to 'RSA Type 4 of 4' in the representative sample. If you are unsure, look at the wording of RSA Type 4 of 4[16] to see if your policy has the same or very similar policy wording.

If you have one of these policies select Yes below.

3. If you have not selected Yes in response to information above, select No below.

Progress: 60%

Step B: Is your policy in the representative sample? 

Go to the representative sample of policy wordings[8] to check if your policy type was included in the representative sample. To do this, follow steps (1) to (4) below.

1. In the contents page, click on each of the policy types issued by your insurer (e.g. if your insurer is Hiscox, click on Hiscox Type 1 of 4; Hiscox Type 2 of 4; Hiscox Type 3 of 4; Hiscox Type 4 of 4).  

2. Then, look for the underlined heading Policies immediately under the ‘policy type’ heading. This is a list of all the different names of the policies of that type. Identify if your policy is included in the test case sample. For example, for Hiscox Type 1 of 4 it lists:

• Professions BI - 16089 WD-PROF-UK-PYI
• *Retail BI - 16105 WD-RET-UK-PYI
• Venues BI - 16110 WD-VEN-UK-PYI
• Technology BI - 16101 WD-TEC-UK-PYI
• Not for Profit BI - 16097 WD-NFP-UK-PYI
• Recruitment BI - 8671 WD-HSP-UK-JMBI, BI - OM (Jelf) - 8671 WD-HSP-UK-JMBI (3) (which are identical)
• Recruitment BI - 16216 WD-REC-UK-PYI
• Trades BI - 16107 WD-TRAD-UK-PYI

If you are finding this difficult, an alternative way to do this is to search (pressing Ctrl + F) in the representative sample document for the first word of your policy name.

3. If your policy name is included in any lists for a policy type of your insurer, click Yes below.

4. If your policy name is not included in any of those lists, click No below.

Progress: 80%

Step C: Do the judgments say that your policy covers Covid-19 related losses?

If your policy is within the test case sample, the outcome of the FCA’s test case binds your insurer. You will need to check what the outcome of the test case was for your policy. To do this:

1. Identify your policy type on the summary Table[9]. For example, 'Argenta Type 1 of 1' is listed as 'Argenta 1'.
2. Then, read the description of whether your policy potentially provides cover in the column headed 'Final judgment on whether the policy would potentially provide cover?'.  Click on Yes or No below depending on the answer given in that column.

Note: If your policy has more than 1 ‘non-damage’ clause and the summary Table has 'Yes' for at least one clause in your policy, you should click Yes below.  For example, if your policy type is 'Hiscox 2', the summary Table[20] says 'Yes' for the hybrid clause and 'No' for the NDDA clause, and you should click Yes below.

Progress: 100%

Is your disease, prevention of access or hybrid clause affected by the test case sample? 

If you have already made a claim, your insurer or intermediary should have written to you to confirm whether your insurer considers that your claim may be affected by the outcome of the FCA’s test case.  In this case, they may have answered this question for you in their correspondence. 

If they have not, or if you would like to check what they have said in the letter, you may check whether your insurer has told the FCA that your policy is, in principle, capable of responding to claims as a result of the BI test case by seeing if it is included on this list[7].

If your policy name is included on this list then insurers have indicated that claims, in principle, are capable of responding to Covid-19. You should click Yes below.

If your policy name is not included on this list, click No below.