Restaurant operators won't be covered by insurance in event of hospitality lockdown [updated]

The government has been criticised by hospitality owners for yesterday (16 March) issuing advice that people stay away from pubs and restaurants because it meant that they would not be able to officially close and claim the costs of the closure on their insurance.

However, BigHospitality​ understands that many restaurant businesses are now being told by their insurers that they will not be covered in the event of any Government imposed lockdown on the hospitality sector.

While some businesses might get a business interruption insurance, it is likely that most will not.

Among the reasons for this is that insurers are saying that COVID-19 is not a notifiable disease on their policies, regardless of Government stance. According to one insurer: “Sadly, the reality is that traditional business interruption cover is unlikely to provide any protection.”

The sector should instead focus on seeking government support to help it pay staff wages and support businesses, according to London Union’s Jonathan Downey. “As an industry, insurance is not the answer” he says.

According to reports, the Government is expected to announce ‘significant’ financial measures today to help support the economy.

Updated - statement from insurance industry​

The Association of British Insurers says in a statement:​​ “Irrespective of whether or not the Government orders closure of a business, the vast majority of firms won’t have purchased cover that will enable them to claim on their insurance to compensate for their business being closed by the Coronavirus.

“Standard business interruption cover – the type the majority of businesses purchase – does not include forced closure by the authorities as it is intended to respond to physical damage at the property which results in the business being unable to continue to trade.

“A small minority of typically larger firms might have purchased an extension to their cover for closure due to any infectious disease. In this instance an enforced closure could help them make the claim, but this will depend on the precise nature of the cover they have purchased so they should check with their insurer or broker to see if they are covered.”