Throughout the COVID-19 pandemic, directors of companies across all industry sectors, ranging from small family enterprises to large multinationals, have been working flat out to keep businesses afloat. But as life begins to return to a semblance of normality, what risks will those directors face themselves during the challenging months ahead?

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In response to the COVID-19 outbreak, the UK government has announced that many businesses must close. The government’s previous approach had been to recommend – but not mandate – closures of certain businesses including social hubs such as restaurants and pubs. This had given rise to criticism that in restricting trade for those businesses whilst not compelling their closure, the government’s actions were causing business interruptions, without creating the conditions that would enable the affected businesses to make insurance recoveries.

Even now that the government has changed its approach, the ensuing business interruption losses are unlikely to be covered by standard business interruption policies.  As the Association of British Insurers (ABI) has recently confirmed, the majority of such policies require physical damage at the property which prevents the business from continuing to trade.  Individual businesses may well have purchased extensions to standard business interruption cover, for instance in respect of losses resulting from notifiable human infections or contagious disease.  However, whilst COVID-19 was classified as a notifiable disease on 5 March 2020, a number of common disease extensions are not triggered on this basis, but rather specify the diseases in respect of which cover is provided. If so, they would be unlikely to provide cover in respect of COVID-19.  This would, of course, depend upon the specific policy wording.

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