MD Aadil Intern at Ubadvocate Email: Contact:-9599395899 Topic: - How To Claim Business Losses Due To Covid-19 Research Report: - 1

Md Aadil
Intern at ubAdvocate
Email : [email protected]
Contact :- 9599395899
TOPIC :- How to claim business losses due to covid-19

RESEARCH REPORT:-
1. Business interruption insurance offers businesses protection

against financial loss when they are unable to operate. In the past
year, the COVID-19 outbreak has raised questions about whether
that coverage includes pandemic-related losses. The short
answer is, it depends on the terms of the policy and how the
insurer, and possibly the courts, interpret them. Some state
legislatures are also getting involved.
2. KEY TAKEAWAYS
 Business interruption insurance is meant to help offset the loss of income

when operations are temporarily halted due to a covered event.
 Unless a business interruption policy specifically lists pandemics or
contagious illnesses as covered, they may not be.
 Some states have introduced legislation that would apply business
insurance coverage to pandemic-related losses retroactively.
3. Business interruption insurance policies can help a business

remain afloat if it has to close temporarily. The policies provide
income replacement that can be used to cover day-to-day
operating expenses and overhead costs until the business is able
to reopen. The National Association of Insurance Commissioners
estimates that 30–40% of business owners carry some form of
business interruption coverage.
4. A typical business interruption policy will include property, liability, and
business income coverage. So you're covered against losses stemming
from damage to your business property or its contents caused by a
covered peril, as well as personal liability claims or loss of income if the
business has to close temporarily.
Covered or named perils depend on the terms of the policy, but they may include:
 Fire damage
 Damage from wind or falling objects
 Lightning damage
 Theft
Generally, damage caused by riots, vandalism, or civil unrest is covered by business

interruption insurance policies as well, unless your policy specifically excludes those
events.
5. The coronavirus pandemic has delivered a significant economic blow to

many business owners. According to data from Yelp, more than160,000
businesses had closed as a result of the pandemic through the end of
August 2020. Of those closed businesses, approximately 60% were not
expected to reopen.
6. Whether business interruption insurance applies in that situation isn't

always clear. But generally, unless a policy specifically lists coverage for
pandemics or contagious illnesses, those events may be excluded.
7. That means if you run a business that's closed temporarily because of a

pandemic, either due to government-mandated shutdowns or out of an
abundance of caution, any loss of income you experience may or may not
be covered by your policy. As a first step, it's worth reviewing your policy
and checking with your insurance agent.
8. For situations in which business interruption policies have ambiguous

language, judicial intervention may be necessary to determine if
pandemic losses will be covered. A handful of court cases have been filed
in connection with business interruption coverage and the coronavirus
pandemic, but the rulings have been a mixed bag, with some decisions in
favor of business owners and others siding with insurers.
9. Several states have proposed legislative action to address pandemic-

related losses and business interruption insurance coverage. As of
August 2020, 10 states, including California, New Jersey, and New York,
had drafted legislation to require insurers to retroactively pay for business
interruption losses caused by coronavirus shutdowns. Federal lawmakers
have also discussed measures related to business interruption insurance
to help offset losses for businesses that had to shut down, but any
definitive legislation has yet to materialize.
10.ecial Perils Policy, commonly known as property policy. “If the insured
plant or office is shut down due to any damage or fire, the company is
eligible for claims. But now, factories are shut due to lockdown. Any
business interruption loss out of lockdown is not covered under the
policy terms,” said an official.
11.However, insurers have given relief to corporates, which shut their units
for more than a month. Their policies will be allowed to be operational
despite the clause that if a unit is shut for 30 days continuously, the
policy cover will lapse. The General Insurance Council (GI Council), the
official representative body of general insurers, has managed to get this
relief for India Inc from the general insurers for the “unoccupied
properties” for more than one month till May 3 under the property
policy. This means companies can claim insurance if the property is
damaged due to fire or any other loss even if the factory or unit is not
operational during the period till May 3.
12.As per the GI Council, a Property Policy specifies if the building insured
or containing the insured property becomes unoccupied and so remains
for a period of more than 30 days (not applicable for dwellings), the
insurance claims may not be applicable if the property affected — before
the occurrence of any loss or damage — obtains the endorsement and
continuation of coverage.
13. On 15 January 2021, judgment was handed down in the leapfrog appeal
heard by the Supreme Court in the test case brought by the Financial
Conduct Authority in relation to the responsiveness of business
interruption insurance in the context of loss caused by the COVID-19
pandemic.
14. The appeals made by insurers were rejected on all grounds. The appeals
by the FCA and the Hiscox Action Group, who had brought limited
appeals after being largely successful in the High Court, were
substantially accepted. The decision will affect many thousands of
policyholders and will result in the payment of claims in the hundreds of
millions, if not billions. We summarise some of the key points of the
Supreme Court’s decision, below.
15. The Supreme Court held that the ‘disease clauses’ only applied where
there had been an occurrence of COVID-19 within the specified radius of
the insured premises. It departed from the High Court by determining
that small differences in construction, such as the use of the word ‘event’
versus ‘incident,’ would affect the validity of the clause. This was a
narrower approach than that taken by the High Court, where the
construction of some clauses removed the radius requirement.
16. However, the Supreme Court tempered this part of its decision through
its careful assessment of causation, ensuring that policyholders would
not be denied claims by strict rules on the geographical locations of
COVID-19 cases. It held that coverage is not restricted to business
interruption that occurs only as a result of COVID-19 cases within the
area.
17.The Supreme Court also ruled that the case of Orient-Express Hotels
Ltd v Assicurazioni General SpA [2010] EWHC 1186 had been wrongly
decided. This case, which overwhelmingly favoured insurers, allowed
insurers to deny claims in circumstances where there are two
simultaneous business interruptions that occur concurrently, on the
basis that the ‘but for’ test was not met. Insurers attempted to rely on
the Orient Express ruling in these proceedings to argue that
policyholders would have suffered similar loss as a result of the
pandemic generally, even if the insured risk (i.e. a disease outbreak in
the local area, or public authority restrictions) had not occurred.
Instead, the Supreme Court ruled that both loss factors would be
covered, providing they emanated from the same underlying cause, and
that it was not always necessary to satisfy the ‘but for’ test when
considering the question of causation. This aspect of the judgment is of
particular significance to those in the insurance industry and will have
much broader implications for insurers in the future.
18.The UK Supreme Court in the Test Case on Business Interruption

Insurance brought by the FCA on behalf of policyholders has decided that
the FCA’s appeal (on behalf of policyholders) should be substantially
allowed, with Insurers’ arguments widely dismissed.
19.Jonathan Sacher and Richard Jennings consider what the judgment

means for businesses and the (re)insurance market.
20.Now that UK law is largely settled in this area, insurers’ attention will now
turn to adjusting, valuing and paying valid claims, as well as calculating
their overall losses for the purpose of making recoveries from their
reinsurers. We expect to see numerous reinsurance presentations
throughout 2021, and given the size of the numbers involved (which will
have increased materially following the Supreme Court’s judgment), it is
possible that we see some significant reinsurance disputes being
arbitrated or litigated.
“This opinion is based on the You tube video

https://youtu.be/7sePcMDOb10 of Jeevan Prakash ,AOR, Supreme Court.”
Thank you.

MD Aadil Intern at Ubadvocate Email: Contact:-9599395899 Topic: - How To Claim Business Losses Due To Covid-19 Research Report: - 1

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Md Aadil

TOPIC :- How to claim business losses due to covid-19

1. Business interruption insurance offers businesses protection

 Business interruption insurance is meant to help offset the loss of income

3. Business interruption insurance policies can help a business

Generally, damage caused by riots, vandalism, or civil unrest is covered by business

5. The coronavirus pandemic has delivered a significant economic blow to

6. Whether business interruption insurance applies in that situation isn't

7. That means if you run a business that's closed temporarily because of a

8. For situations in which business interruption policies have ambiguous

9. Several states have proposed legislative action to address pandemic-

18.The UK Supreme Court in the Test Case on Business Interruption

19.Jonathan Sacher and Richard Jennings consider what the judgment

“This opinion is based on the You tube video

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