Coronavirus: No insurance cover for most virus-hit businesses

Most businesses do not have insurance cover to compensate them for coronavirus losses, a trade body and other experts have said.

Small businesses, in particular, are unlikely to have such a policy.

Business interruption cover is generally sold to compensate for damage to premises, following instances such as fire and flood.

The Association of British Insurers said standard policies did not include forced closure by the authorities.

So, for most businesses, they would not have been entitled to compensation, even if the government had ordered them to close.

A spokeswoman for the association said: "Irrespective of whether or not the government order closure of a business, the vast majority of firms won't have purchased cover that will enable them to claim on their insurance to compensate for their business being closed by the coronavirus."

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Many figures from the worlds of theatre, music and nightlife were angry that Prime Minister Boris Johnson advised people to stay away while not forcing venues to close, which they said could have given them financial protection.

However, across the wider business sector, it is unlikely that insurance protection would be in place to compensate firms for their losses if they closed, whether through a government order or not.

Kate Nicholls, chief executive of UKHospitality, which represents the leisure sector, said: "The insurance industry have simply abdicated responsibility for the thousands of hospitality venues who have bought policies in good faith and who, through no fault of their own, are unable to trade.

"Removing that safety net impacts millions of workers who depend on them for their livelihood. This is a slap in the face but perhaps it will be a wake-up call to government that there is no one else who can help save those jobs."

Cover for infectious diseases has been available to buy as an extra, but analysts Defaqto say typical policies only cover businesses if the premises themselves are closed by the authorities as a result of disease at the premises. Covid-19 is never included on the list of diseases covered by this insurance.

Closing businesses will have a knock-on effect for the jobs and incomes of millions of people.