This article is about changes to insurance policies that will leave an unlucky few to deal with legal issues relating to illnesses that insurers would have dealt with pre Covid.

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Compensation for Covid …..???

Insurers haven’t paid up willingly for claims from businesses that closed when they were told to do so. However, they are very pleased that businesses did what they were told. The closure preserved lives. 1 life saved is enough, yet closure probably saved 5 or 6 digit numbers.

Some Insurance Companies are now renewing and issuing policies with a Covid exclusion on the public liability section. Which means that insurers will not help out if someone makes out that they caught Covid at a businesses premises. These changes should be made clear yet, despite the confusion and an 8 day hearing, insurers are not putting this announcement front and centre of their documents.

I understand that it would be hard for anyone to prove where they caught an illness that seems to be everywhere. That doesn’t mean it wouldn’t tie a business in knots trying to deal with it. A solicitor recently charged £1,200 to ensure a malicious claim didn’t make it to court.

There are already search engine results for “Compensation for Covid’. The cases so far relate to employees and insurers haven’t excluded cover under the Employers’ Liability insurance which covers these claims. If a member of the Public is ill if Covid is contracted “because a business was negligent”, surely the NHS shouldn’t be left with the bill?

A bit Harsh ?

Whilst it is harsh for insurers to act like this, they are passing the buck, in a way never conceived, back to policyholders. The policyholders can protect themselves by undertaking adequate risk assessments, backed up by health and safety and making sure with PPE. We all know what Personal Protective Equipment is now, it keeps us safe yet is often uncomfortable.

Why is it harsh? One would want someone who did contract Covid because someone else was negligent to be fairly compensated, the same as we would if they were poisoned because someone was negligent.

Cash flows…….in which direction?

The vast majority of all organisations in the UK have less cash available than previously. That’s why they bought insurance, to pay for big problems, not little ones. Now insurers are making them find legal fees for something an insurer could defend quite easily. If they have no cash and are unable to defend, they will receive a judgement that could tip them into liquidation. All for a vindictive claim.

Worse still, if the claimant had been poisoned by the business, they won’t receive all of the compensation they are awarded if the business doesn’t have it. The business will go bust, the claimant won’t get enough to look after themselves and insurers sit on the sidelines.

Finally, insurers know how to get rid of spurious and vindictive claims quickly and easily. They have seen many similar “group actions” or “claim trends” in the past. So it would cost them a modest amount to apply the same process, compared to businesses trying to do it for the first time. The insurers could send the Government the bill. Just a thought.


Top Tip:


You should check your insurance at renewal time. Whilst there was a very public hearing on a simple bone of contention, some insurers added new exclusions to a lot of policies quietly . These are exclusions that affect a huge number of businesses.

Recently, the Association of British Insurers said the PR surrounding Covid had hidden the “good work” insurers were doing. He didn’t mention this.


 Wrap up:


Insurers were definitely covering this before Covid. Evidence is the fact they had to issue a specific exclusion to remove the cover they said they did not provide.

Whilst a spurious “covid illness” claim should be easy to defend insurers have added an exclusion, when they thought we were not looking, that makes business owners lives difficult. When they really didn’t need to.

Note:  At this time, not all insurers have excluded it, and some staff at insurers do not know if they have or not, (we’re still waiting for advice from some who haven’t called back) they all say “watch this space”. Clarity is required.