Make sure your business cover is airtight when claiming over coronavirus, expert warns

While the coronavirus continues to wreak havoc on larger businesses, stock markets and economies around the world, individual businesses of various sizes are not only vulnerable to work stoppages but might not have adequate cover from the outbreak’s impact in their insurance.

This is according to partner for insurance at Webber Wentzel Raynold Tlhavani. According to Worldometer, the novel COVID-19 virus has caused 162 392 cases and 6068 fatalities. According to the site, 75 968 cases were in recovery by Sunday afternoon.

Coronavirus has rocked markets globally, with the Johannesburg Stock Exchange posting its worst day since 1997 and the Rand weakening 0.28% on Thursday. Reports indicate that even though countries are not stopping the trade of goods, the pandemic may have a chilling effect on shipping.

Tlhavani said businesses must ensure they are indemnified under their business interruption insurance policies for damages arising from the disruptions caused by COVID-19.

"Some of these businesses may discover that they are unfortunately not covered as some business interruption policies require that there must be underlying material damage to insured property to trigger the business interruption section of a policy," Tlhavani said.

Tlhavani said most of the disruptions caused by the spread of coronavirus were unlikely to result in physical damage to insured property. He said this would result in businesses possibly not being able to claim on policies for business interruptions.

"Some business interruption policies include extension clauses for infectious or contagious diseases which extensions do not require material damage as a condition to indemnity under the business interruption section," said Tlhavani.

Tlhavani said time would tell the extent to which the outbreak would affect business and the ability of existing policies to protect businesses from similar challenges in the future.

"The financial losses arising from the outbreak are likely to be felt for years to come. It will take a careful analysis of the relevant policies of a business to ascertain whether that business is entitled to indemnity under its policies for losses arising from the outbreak," he said.

Speaking to reporters during a post Cabinet briefing on Thursday, Minister in the Presidency Jackson Mthembu said a special Cabinet meeting would be held on Sunday to discuss each Cabinet portfolio’s response to coronavirus, which would inform government’s overall intervention.

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