Insurers accused of coronavirus 'loophole' refusal

The coronavirus outbreak has brought tourism in the Lake District to a standstill

Lake District tourism businesses have accused insurance companies of using a policy wording "loophole" to refuse payouts for losses due to coronavirus.

Cumbria Tourism found 72% of its members who responded to a survey said they had been turned down for a payout.

Many paid a business interruption premium, but were still refused because it did not specify Covid-19.

The Association of British Insurers said each claim was examined on its merits according to policy wording.

Daniel Holder, manager of the Quiet Site near Ullswater, was one of those who thought they would be covered in the event of disease.

He said: "I pay a premium of £5,000 a year to cover business interruption and imagined it was just a simple case of making a claim and being paid out but that's not the case.

"We've been told by our insurance company that our claim would be turned down if we made it."

'Massive issue'

Cumbria Tourism said insurance companies were relying on "a loophole" that meant if Covid-19 was not specified on a policy, they would not pay up for business interruption.

Its chair Jim Walker, described it as a "massive issue".

He said: "It's a very complicated one but our summary is that the insurance industry is not working correctly at the moment for tourism operators.

"We're going forward after a difficult winter and with no summer trade to speak of, so we'll be looking at a £2bn loss of the £3bn total of the year's income.

"If our businesses don't get significant income as the autumn approaches then it will be very, very difficult to weather the winter."

The Association of British Insurers said each claim was examined on its merits by the insurer according to all the policy wording, and it could not comment on any specific insurance contract.

It added: "Unfortunately, no country in the world has an insurance market that is able to cover widespread pandemic cover and we need a debate about how this can best achieved in the future."