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COVID-19 insurance cover: What you need to know

With news that insurers are amending policies, claims could be made difficult for care providers. What is changing and what can you do to protect your business? Simon Bentley, Director at Phoenix Specialist Risk Solutions, shares the details.

COVID-19 has impacted us all in different ways and you don’t need to be an insurance expert to have noticed the bad press that insurers have had in the recent weeks around cover for coronavirus, so we hope this article helps with what you need and what you should be aware of going forward.

There are different aspects of cover included within most policies and we are focusing only on a few aspects here. If you are in doubt about your cover or choices, please contact your broker or us and we will try to help you.

At the time of writing this, there have already been a number of changes within the insurance market for care, with some insurers not writing new business, some covers being restricted, and some being removed totally. Here, we’ll go through what you need to look out for.

Business interruption

This cover is designed to keep you in the same financial position as if the event had never occurred, however the event is usually linked to a material loss, such as that resulting from a fire or flood.

Following the SARS outbreak in 2002-2004, many insurers changed their wording from ‘infectious diseases’ to a list of diseases. However, due to COVID-19 being a new disease, it is not included on the list. This could make it difficult for providers to make a claim.

Some policies also have certain trigger points, such as the business having been forcibly closed by a competent local authority, and whilst many establishments, such as bars, shops and restaurants have been forced to close, care businesses have not and thus a claim has not been triggered.

Nearly all policies which are being renewed will now have a COVID-19 exclusion for business interruption claims, so if you did have the cover you are unlikely to have it going forward.

Employer’s liability

Employer’s liability is a statutory cover and if you employ anyone you have a legal requirement to have Employer’s Liability Insurance.

The statutory minimum level of cover is £5m, however it has become general practice for cover to be issued at £10m. Most of these £10m employer’s liability policies have an inner limit for terrorism cover at £5m. This could be a possible area where cover might change to include an inner limit for COVID-19 but the cover cannot be excluded.

Public liability

Unlike employer’s liability policies, public liability is not a statutory cover and as such changes can be made to the cover and it is possible to exclude COVID-19 from policies.

In the general insurance market, this is already happening, with some insurers adding a COVID-19 exclusion. This often also refers to SARS. Some insurers have taken this a step further and are applying a pandemic exclusion from their cover.

Others are taking a different approach and are specifically including cover for COVID-19 but are applying an inner limit on the amount which can be paid out for costs and expenses. This approach has received mixed responses, as whilst it is limiting the cover it is also specifically including the cover.

Legal advice and expenses

Legal advice and expenses are usually included within your policy and this is sometimes overlooked, but it is an important part of the cover. Insurers’ solicitors provide helplines and advice for clients on many topics, including human resources issues. It may be you need to furlough staff members who are not able to work during the pandemic, for example if they are on the shielding list. In these circumstances, the advice line will be able to provide you with guidance on what to do.

Several insurance providers also include confidential counselling lines which are available for you and your staff to talk in a confidential environment, about not only issues arising from COVID-19, but wider topics too. At a time of great stress, such helplines could prove their worth.

Life after COVID-19

We don’t have a crystal ball, but what is understood is that life will take on a new normal. The insurance market was already going through a number of changes, with insurers looking reduce their exposure in loss-making business. This has seen reduced capacity within Lloyds of London, with the worst performing classes either dropped or subject to review and price increases. The actions of Lloyds are mirrored in the general insurance market. It is inevitable that the care sector will suffer, and price increases are to be expected; a number of insurers have also already stopped writing new care business, at least for the time-being.

Our advice

I recommend that:

  • When policy renews, carefully check what you are sent to review and look for any new restrictions placed on your policy.
  • If you find COVID-19 is excluded from the liability cover, consider if this is acceptable to you as alternatives which include the cover may still be available.
  • Concentrate resources on ensuring the safety of your staff with adequate PPE etc. This is something your insurers will expect you to do.
  • Above all, keep your staff as safe as you can to protect yourself in the future.

When we finally get out of this strange place, life will be different, and we will need time to reflect and mourn. During these times, remember the amazing work you have done to care for vulnerable people when they needed it. We are all clapping to show our appreciation to you – well done and thank you.

Simon Bentley is Director at Phoenix Specialist Risk Solutions. Email:

Do you have any questions for Simon? Leave a comment on this article and Phoenix will do their best to help. Alternatively, get in touch directly.

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