2020-03-20 

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Business Interruption Insurance Won't Cover for Coronavirus

Farmers and rural businesses are being urged to take all necessary precautions and minimise risks of interruption to business operations, as they will not be covered for any closure due to the coronavirus outbreak.

“Put simply, there is little or no insurance available that covers farming, or any other sector for that matter, due to the exceptional circumstance of the coronavirus outbreak,” says Nigel Wellings of Acres Insurance Brokers.

Nigel Wellings

Nigel Wellings

“Livestock and arable farmers may well be under the impression that they are covered through their Business Interruption policies, but I am afraid this won’t be the case,” he adds.

Business interruption covers for physical damage, such as a roof being blown off a grain store, or fire damage that limits or stops business operations.

These will be caused by ‘defined perils’, such as fire, lightning or theft, and business interruption insurance will cover for losses incurred during inactivity, the expense of storing grain elsewhere until damage is repaired or similar such costs.

“Business interruption does not cover for closure due to Government action, as is the case with coronavirus,” continues Mr Wellings. “Certain policies may include add-ons for Government or public body closures due to cases of notifiable diseases, such as Foot and Mouth. Unfortunately, coronavirus was not a notifiable disease, so won’t be covered.”

With such low crop levels in the ground due to adverse weather conditions and flooding, this couldn’t really come at a worse time.

“This will also particularly hit diversification businesses,” says Mr Wellings. “We have wedding venues that have already taken deposits, restaurants and cafes that have either had to close or are suffering from cancellations and lack of business, and Open Farms that have closed their doors.”

Business Interruption cover will not help in any similar circumstance, and sadly this is the case across the farming sector.

“My main advice is to lobby your MP for support. While promises of Government support and loans are welcomed, how quickly will these come in?” asks Mr Wellings.

“There is an immediate need for cash-flow relief, with so many farms running on such thin margins, particularly during a difficult year with the weather,” he adds.

Mr Wellings also believes the Three Crop rule needs to be reviewed again, after Defra minister George Eustice refused to waive the rule which dictates how many crops a farmer must have in the ground. “This rule really needs relaxing during these exceptional circumstances,” he says.

By following the Government’s public health guidance and implementing temporary business changes, Acres Insurance Brokers’ business continuity plan means it is operating as usual, and is happy to advise and assist anyone with concerns or queries on any farm or rural business insurance related issue.

Acres Insurance

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