by Willem Lombaard | Olive Insurance Brokers | 28 April 2020
If a business chooses not to open because it would not be financially viable under the new COVID-19 risk-adjusted lockdown restrictions, what would the implications be regarding insurance cover?
Under the newly proposed risk-adjusted lockdown rules, businesses in general and restaurants in particular have a lot to consider - not least of which is their insurance cover.
If a business chooses not to open because it would not be financially viable under the COVID-19 restrictions, what would the implications be regarding insurance cover? In this article, we shed some light on the most important insurance issues to consider.
Not all insurance policies are created equal
Not all insurance policies offer the same cover. There are many insurance companies and underwriting agencies in South Africa, each with their own unique policy terms and conditions. What might apply to your neighbour might not apply to you. Some insurers offer more generic, bare-bones commercial insurance cover, whilst others offer more industry specific policies with additional industry specific benefits.
So, it is best to steer clear of the “...yes, but my neighbour said...” decisions. Rather, make some time and call your insurance broker or insurance company for advice applicable to your specific situation and policy.
When your risk changes, always inform your insurer
As a general rule, you must always inform your broker or insurer when your risk situation changes. Most policies contain a specific condition in this regard. Business which remain closed for an extended period during and after lockdown is most definitely a change in risk. Insurers throughout South Africa have been issuing guidance notes on what their underwriting rules are during lockdown, and it would be advisable to call your broker to make sure you know what these rules are.
The above is especially important going forward, when levels of risk-adjusted lockdown rules are applied, and when your decision to open or remain closed becomes a business decision, rather than a compulsory, government enforced regulation. Tell your insurer!
If you did not have a valid business interruptions claim before, then unfortunately nothing will change with phased re-opening. You will also no longer be able to purchase new cover against the risk of pandemics, as almost all insurers and reinsurers globally have discontinued new cover for pandemics and Covid-19.
If you are fortunate enough to have cover, it is very important that you speak to your broker about your decision to re-open or not, and how your decision will impact on the cover that you do have. This will come down to the detailed interpretation of your policy wording, and for that you will need the expert advice of an experienced broker.
Other policy conditions
Restaurant owners and managers must remember that all your other normal policy conditions will continue to apply. These conditions usually have to do with the requirements for burglar alarms, sprinkler systems, surge protectors on electrical appliances and other conditions like additional fire precautions if you are in a thatch building, etcetera. Please check with your broker what your specific conditions of cover are.
Call your broker
Rule of thumb: Always make sure you have a competent insurance broker, who is able to navigate the pitfalls of insurance with you, especially during these uncertain times. Many businesses are looking to reduce cover to cut back on costs, but be very careful where you cut. Crime is expected to increase, and the last thing anyone wants is to have an insurable loss with no insurance cover.
If you need any more information or guidance, you may contact Olive Insurance Brokers at 011-462 3393, or firstname.lastname@example.org