Commercial real estate & Real estate disputes

Coronavirus & business interruption insurance: practical considerations for tenants   

In these challenging times for tenants, claiming for losses in relation to COVID-19 may be difficult but not impossible.



Typical business insurance policies cover standard risks and are unfortunately unlikely to cover the impact of COVID-19 (including forced closure by the government). Furthermore, business interruption provisions are normally connected to property damage.

Cover for business interruption due to infectious or notifiable diseases may cover losses relating to COVID-19, which has been classified as a “notifiable disease” by the UK government. However, the purchase by tenants of such cover would have been rare and many policies specify the covered diseases, which most probably do not include COVID-19. Cover under a “non-damage, denial of access” extension to a business interruption policy may also be possible, but, again, this upgrade was not commonly obtained by tenants. The Association of British Insurers has confirmed that forced closure of a business could trigger a claim under such an extension if the infectious or notifiable disease cover is either unspecified or includes COVID-19. Whilst the likelihood of either of these applying is slim, it is still worth checking the policy wording.

Tenants claiming under the policies and extensions mentioned above could encounter other difficulties, for instance there may be a policy requirement for an outbreak at the premises of the business.

We understand that Aviva has already confirmed that its business interruption cover does not include losses arising from COVID-19, although other insurers have highlighted that individual policy provisions should be checked and that coronavirus-related claims would be dealt with on a case-by-case basis.

We therefore recommend that tenants closely check the specific terms of their insurance policies, which may allow claims for business interruption, and speak to their insurers, brokers or insurance advisors as necessary.

Update: Please also see our guide for businesses claiming their losses from the coronavirus outbreak, which has now been published here