Covid-19 Commercial Broker/Customer update

Our response to your Covid-19 questions regarding Commercial Policies

2nd November

On 2 November, the Supreme Court granted permission to appeal to all those who had applied for it (see FCA link: https://www.fca.org.uk/firms/business-interruption-insurance)

The appeal in the Supreme Court will be heard from Monday 16 November and is expected to last for 4 days.

The appeal hearing will be by video link.

18th September

In July 2020, the FCA started legal proceedings in the High Court against a number of insurers as to how certain business interruption policies should be interpreted and whether they cover losses arising out of the Covid-19 pandemic. The Court has now handed down its judgment on the interpretation of certain business interruption policies. 

The final judgment is highly complex and it will take some time to review. Although our policy wordings were not directly considered during the test case, Covéa Insurance remain committed to apply the relevant findings of the test case to any potentially affected claims or complaints. For this reason, we are now working through the full detail of the judgment and reviewing it carefully to assess its application to the individual claim circumstances of those clients who may be impacted.  

We will be communicating directly with those clients and their brokers who are impacted and we will continue to provide updates on our website https://www.coveainsurance.co.uk/covid-19-information/. You do not need to anything further at this point.

We understand that the Covid-19 crisis has brought with it unprecedented challenges for business, individuals and the country as a whole and we remain committed to continuing to work with our clients, our partners and the industry to provide certainty as quickly as possible.

For more information on the case and judgment please visit the FCA website: www.fca.org.uk/firms/business-interruption-insurance.

31st July

The High Court hearing of the FCA’s business interruption insurance (BI) test case has reached its conclusion. Over the course of an 8-day hearing, two High Court judges have heard arguments from counsel on behalf of both the FCA and insurers, concerning how BI policies should respond to the losses suffered by policyholders whose businesses have been affected by Covid-19 and resultant government measures. In light of the pandemic, proceedings were conducted remotely via video-link and publicly live-streamed.

The judges noted that judgment may be a more onerous task to write than anticipated and cannot be rushed, given the importance that this case will have on many different parties and individuals. However, they advised that their aim was to issue judgment by late September.

FCA Business Interruption test case

You will be aware that the COVID-19 pandemic has highlighted the cover provided by insurers under Business Interruption (BI) insurance. The Financial Conduct Authority (FCA) is seeking legal clarity and certainty around this issue by holding a ‘test case’ in court against a range of BI policy wordings that are representative of the key issues in dispute between policyholders and insurers. www.fca.org.uk/firms/business-interruption-insurance

We welcome the FCA’s review process which sets out to resolve some key contractual uncertainties  and causation issues to provide clarity for policyholders and insurers. We have reviewed our policies carefully and will be contacting customers and brokers if their claim relates to a test case in accordance with the FCA guidance. We will continue to keep brokers and customers informed more generally by updating our frequently asked questions on the COVID-19 section of our website.

15th July 2020

We are writing directly to any policyholders who have a potentially affected claim or complaint including those policyholders where claims have been declined. The initial communication to policyholders will provide an explanation of the nature and purpose of the test case, the key steps taken and likely timetable of the test case, an explanation of the implications for existing and potential claims and a link to the FCA webpage for the test case. All policyholders with potentially affected claims and complaints will be sent correspondence by 15th July 2020.

We will provide further updates to policyholders with potentially affected claims or complaints as the test case progresses. The method of communicating updates will be appropriate to the update being provided for example, an update on the stage the test case has reached is likely to be communicated via the Covéa Insurance website, however, an update setting out a change to the scope of the test case that affects whether a policyholder has a potentially affected claim or complaint will be provided directly to the policyholder in writing as per the initial communication used to inform them that they have a potentially affected claim or complaint.  

In order to keep our broker partners up to date, we will be providing a copy of the template letters and a data extract indicating which customers have received the relevant correspondence.

We will continue to keep brokers and customers informed more generally by updating our frequently asked questions below but would encourage customers to contact their brokers in the first instance if they have queries.

Underwriting

These are unprecedented times and the situation regarding Covid-19 is changing rapidly, but we continue to follow the advice provided by the Government. To help us manage this demand, please can you email us or use Webchat for any underwriting queries or quotes where possible – you can find our contact sheets here.  

Claims

We’re pleased to say that our Claims Team remains open as normal, supporting our customers at their greatest time of need. However, it may take longer than usual for us to respond due to many of our staff working from home. Rest assured our out of hours Claims Team remains operational so we can continue to support your customers 24/7, 365 days a year.

Our priority at this time is the continuation of services to our existing customers. Your usual contacts will remain available to you as normal.

We're continuing to work in close contact with our suppliers to ensure that we meet customer needs as best as possible and deliver a high quality service at the same time.

Protecting our customers (Policyholders) and suppliers

Delivering a high level of service to customers remains a top priority and we have taken some additional measures to ensure the continued safety of our customers and suppliers throughout this time. Specifically these include:

  • Liaising with our suppliers regarding their operational resilience plans and ensuring that they are following latest Government advice and taking steps to ensure the health, safety and wellbeing of their employees.
  • Encouraging suppliers to be extra diligent whilst handling customer property and managing claims, ensuring important hygiene practices are followed at all times.
  • Where possible and appropriate, assessments and meetings are taking place via video conferencing facilities, to minimise human contact and allow claims to continue to be efficiently processed.

Our response to your Covid-19 questions

We appreciate that these are extremely uncertain times which have raised many questions for you and your customers. Here you can find our response to the most common questions we have been asked in respect of our Commercial policies. We will continue to add to these as and when we can.

1. Getting back to work

Please click here to read some guidance from our Specialist Risk Management partner – Riskstop.

2. Unoccupied Premises (Existing Business)

Please click here for our updated guidance regarding temporary unoccupied premises as a result of Covid-19. This guidance is applicable from 31st July 2020

3. Renewal Extensions

Where renewal instructions have not been received by Covéa Insurance prior to Policy expiry because:

a)The customer has been unable to provide instructions to the broker due to Covid-19 disruption, or

b) The broker has been unable to provide instructions to Covéa Insurance due to Covid-19 disruption

We will adopt the following approach:

a) Customer unable to provide renewal instructions to the broker:

  • We will permit the broker to give provisional renewal instructions to Covéa Insurance on the basis of invited terms.
  • Where there are outstanding renewal questions or subjectivities (eg. clarification of wages/turnover figures), renewal will be on the basis of the existing risk information.
  • Covéa Insurance will issue a full annual policy from the original renewal date in line with our renewal invitation.
  • Within 14 days, if the broker can show that:
    • The customer obtained an equivalent policy from the renewal date, or
    • The customer has instructed an alternative broker, or
    • The customer does not wish to insure at all, then

Covéa Insurance will cancel the policy from renewal date with a full return of Premium, unless there has been a reported or known loss or occurrence in the 14 day period.

  • Within 14 days the broker should review the renewed Policy, check the Sums Insured and risk information are correct and answer any of the renewal questions/subjectivities.
  • If the updated renewal information is different to the basis of renewal, Covéa Insurance may re-underwrite accordingly including:-
    • Amending rates, terms and conditions.
    • If risk improvement subjectivities have not been completed then these will continue to be subjectivities of the renewed Policy contract unless otherwise agreed by the underwriter.
    • If new information makes the risk unacceptable then we will issue notice of cancellation in accordance with policy conditions and return the relevant proportional Premium.
  • If the customer wishes to cancel outside the 14 day period then standard cancellation provisions/return Premiums will apply.

b) Broker unable to provide renewal instructions to Covéa Insurance:

  • Covéa Insurance will lapse the Policy in the usual way.
  • Within 14 days, if the broker can show that:
    • They had renewal instructions from the customer, but
    • They had been unable to implement them due to Covid-19 related restrictions encountered by the broker (e.g. staff illness, inadequate BCP etc), then
  • Covéa Insurance will reinstate the policy from the renewal date.
  • If there are changes to exposure, Covéa Insurance may re-underwrite accordingly – see above.

Proviso

The above protocols only apply on a contingent basis if there is a plausible Covid-19-related explanation for the non-renewal. 

These protocols are valid for a maximum 3 months and will cease once the current Government Covid-19 restrictions are eased, if sooner.

4. Working from home

Property

During this period, we will extend our Policies to cover any Computer Equipment, Contents and Stock belonging to the Business whilst necessarily and temporarily removed from the Insured’s Premises and located at the residential home of an Employee of the Insured for Business purposes.

This cover will also extend to any necessary and direct transit between these aforementioned locations.

This automatic cover extension will be subject to:

  • Adequate Sums Insured being noted on the Policy.
  • The maintenance of a fully up-to-date and documented inventory detailing the equipment which has been temporarily removed, its location, and whose possession it is in.
  • A maximum period of 90 days from the date the Premises was closed, or up to the point where the customer is able to resume trading from their Premises, whichever is the sooner.
  • The customer needing to work from home to comply with Government guidance on social distancing and self-isolation during the lockdown period.
  • The aforementioned locations being situated within the Territorial Limits.
  • All terms and conditions of your existing Policy, unless extended or agreed by us.

Our liability under this extension shall not exceed £50,000 any one occurrence and in the aggregate.

Liability

Our Policy coverage provided will automatically allow for Employees of the customer to work remotely as long as the scope of the work carried out is within the business description and subject to all Policy terms conditions and limitations.

It is the Employer’s duty to consider what may cause harm to their home or remote workers, or other people, as a result of the work being carried out within the home or in remote locations.

Home or remote workers can help by identifying the hazards for their manager, and we would expect a documented risk assessment to have been completed with consideration also given to the risks this work might present to other people on the premises, for example keeping trailing wires and cables tidy, to prevent a tripping hazard.

Employers need to ensure that the aforementioned risk assessment incorporates Display Screen Equipment and ergonomic exposures with particular reference to Employees who have not previously worked from home.

Useful guidance to assist Policyholders and Brokers can be provided through the HSE website here

Terms and Premium

  • The aforementioned cover will be included at no additional Premium for a maximum period of 90 days from the date the Premises was closed, or up to the point where the customer is able to resume trading from their Premises, whichever is the sooner.
  • Please ensure that the customer and their Employees take all reasonable precautions to protect and safeguard their property during this period.
  • All existing Policy terms conditions and exclusions will remain unaltered and will apply to respective home working premises for each Employee.
  • This temporary additional cover will cease at the end of the period mentioned above (unless we agree to provide a further extension).
  • For any queries not covered by this statement, agreement by us is required.

5. Changes to Sums Insured and estimates

We will respond to broker requests to reduce Sums Insured, and adjust wage and turnover estimates, if these are supported with appropriate rationale. It is important that Brokers ensure that customers’ cover is retained at levels which fully protect the Business when post-lockdown conditions return.

6. Laid-up vehicles (Commercial Fleet Policies)

We will work with customers who want to take their vehicle(s) off the road for a temporary period. We have two options for the customer:

  • For customers who declare their vehicle(s) as SORN, we can provide reduced cover for Laid-Up Accidental Damage, Fire & Theft or remove the vehicle from the Policy entirely. We would remove the vehicle from the Motor Insurance Database and provide a return Premium. Customers will need to provide evidence of a SORN declaration when requesting this.
  • Due to the exceptional circumstances we are in, we will also accept requests for Laid-Up Accidental Damage, Fire & Theft cover for vehicles that are not being used, and are happy to provide this cover without a SORN declaration. In this scenario, we will need written confirmation of this request and details of the vehicle(s) being Laid-Up. When vehicles are no longer Laid-Up, we will need formal confirmation as to precisely when full cover is required. At the point that all Laid-Up vehicles have returned to full cover, we will provide a pro-rata return Premium less £20 per vehicle per month, or part thereof, for this reduced cover. If a vehicle, which has been declared as Laid-Up, is used during this period, and a claim is made, we will not return any Premium to the customer.

Customers should be aware that in both these circumstances, a vehicle on Laid-Up Accidental Damage, Fire & Theft cover or SORN cannot be parked or driven on the road (as defined within the Road Traffic Acts), it must be kept off-road, garaged or on private property.

7. Commercial Motor - Change of use

If a customer, partner, director or an Employee wishes to use their company vehicle for voluntary purposes to transport medicine or groceries to support others impacted by Covid-19 or for the activities of an NHS volunteer responder then cover is unaffected.

Cover will be subject to the permission of the customer and only applicable for an existing driver already on that Policy and any Policy conditions (e.g. driving restrictions or increased excesses) will continue to apply. This does not cover use for hire or reward purposes.

This does not apply to Laid-up vehicles, as referenced in 5. above.

There is no need to contact us to update documents or extend cover in this way.

8. Property - Change of use

Where customers plan to temporarily use their insured Premises for any purposes different from the defined Business activity noted on the Policy due to the impact of the Covid-19 pandemic, we will seek to respond flexibly where possible, subject to advices in writing from the broker.

9. Broker Credit Periods and Customer Instalment Payments

Our usual terms apply. We will keep this under review, but are happy to answer any additional queries on a case-by-case basis upon request.

10. Security

Conditions in our Policy wording provide clarity around security requirements to customers.

Customers must adhere to Policy terms, conditions and the Risk Management Guidance outlined in the Unoccupied Premises section at the start of this document.

We are happy to answer any additional queries on a case by case basis upon request.

11. Statutory inspections

Engineer surveyors are categorised as ‘key workers’ and there is agreement across the UK inspection industry to continue to provide inspection services for essential services, which supports National Health services and infrastructure.

Inspections will continue in the following sectors:

  • Health and Social Care – Those working as part of the health and social care supply chain, including producers and distributers of medicines and medical and personal protective equipment.
  • Education and Childcare – Including education facilities, who must remain open while the Covid-19 restrictions, are in place.
  • Key Public Services – This includes the justice system, religious buildings (for funerals), charities, broadcasters/journalism who are providing public service broadcasting.
  • Local and National Government – Essential public services, including Government agencies and arms-length bodies.
  • Food and Other Necessary Goods – Food production, processing, distribution, sale and delivery, as well as those essential to the provision of other key goods (e.g. hygienic and veterinary medicines).
  • Public Safety and National Security – This includes the Police, Ministry of Defence, contractor and armed forces, fire and rescue service, National Crime Agency staff, border security, and prisons.
  • Transport Industries – Including those who will keep the air, water, road and rail passenger and freight transport modes operating during the Covid-19 response. This includes those working on transport systems through which supply chains pass.
  • Utilities, Communication and Financial Services – This includes essential financial services, the oil, gas, electricity and water sectors, information technology and data infrastructure sector and primary industry suppliers needed to continue during the Covid-19 response. In addition, the civil nuclear, chemicals, telecommunications, postal services and delivery, payments providers and waste disposal sectors are included.

All non-essential industries, such as pubs, clubs, restaurants etc. are not included in this list. In addition, inspections of equipment in all residential properties are also not included, as these are viewed as providing a greater risk to engineers with the current Government restrictions to stay at home.

At this time the Government have not relaxed the requirements on inspections, however we will advise you further if this position changes.

An engineering surveyor will contact each customer as and when their inspections are due to discuss requirements and options.

If you are still unclear, or need additional guidance, please speak to your underwriter.

12. MOT Extensions

The UK Government confirmed that for cars, vans and motorcycles, the MOT expiry date will be extended by six months if it is due on or after 30th March 2020. The vehicle must still be roadworthy despite this. If your customer’s vehicle is roadworthy, it will be covered by the Policy under these provisions. The MOT certificate will not be extended if your customer’s vehicle’s MOT expires on or after 1 August 2020. Your customer must book an MOT as usual. MOT centres are open now for you to get an MOT. Customers can get an MOT up to a month (minus a day) before it runs out and keep the same renewal date.