Recently, the media has been tackling the issue of the COVID-19 pandemic not being covered on a typical commercial insurance policy. This issue has created an uproar across the world due to the crippling effect the virus has had on businesses and on the world economy as a whole.
As would be expected, a typical commercial insurance policy has certain items that are specifically not covered at all. All over the world we are seeing wars, terrorism and in the early 2000s, “weapons of mass destruction” was the term used to describe a scary reality of nuclear weapons causing a third world war. We are all living in uncertain times, but the one thing that is certain is the fact that most business insurance policies are very clear on what is covered and what is not covered.
Typical commercial Insurance policies come in two forms – Peril Based policies and All Risk Policies.
In short, the most common policies are peril-based policies and are policies where what is covered is clearly listed in the policy wording and if it is not mentioned in the wording then it is not covered. Each section also has specific exceptions and exclusions listed for those specific sections, but these policies are very clear as to what is covered and what a client could potentially claim for. With reference to the COVID-19 pandemic or any other pandemic for that matter, this is not included in the wording and therefore not covered.
The less common type of business policies are “all risk” policies, these are policies where, unless the wording states that loss or damage relating to a particular section is specifically excluded, the cover is included, however these policies often do not have
Insurance policies have been scrutinized based on the COVID-19 pandemic not being a valid Business interruption claim, but what if we told you that this isn’t the only disaster or major event not covered on your policy?
Forming the basis of every insurance policy wording are the general exceptions, conditions and provisions that will be applicable to each section on the policy document and must always be read in conjunction with the rest of the policy. These general exceptions are most commonly, the following:
- War, Riot and Terrorism
- Computer Losses
Each of the above can be broken down in detail. However, just from the headings above, a pandemic may just be a small bitter pill to swallow in the bigger scheme of things.
For more information regarding your own commercial insurance policy, please do not hesitate to contact our offices or your broker personally to discuss and explain your cover in more detail.
Disclaimer: The advice contained in this article is for general purposes only and does not consider individual circumstances, objectives, or financial needs. Accordingly, readers are advised to seek appropriate advice from licensed professionals prior to taking up a financial product or service or amending any current policy.