Our pub is shut... yet insurer says we’re not covered
Probes a world of scams and scandals
Mrs C.D. writes: Congratulations on last Sunday’s report about the rejection of the pub owner’s claim under his business interruption insurance with Lloyd’s of London. We are in the same position. We own a small village pub in Devon. As the Government ordered pubs to close, we made a claim under our policy with New India Assurance. Our business interruption cover applies when there is an outbreak of any notifiable disease except Aids within 25 miles. The policy is unambiguous but our claim has been rejected. I paid a lot in premiums to ensure we could survive, and now I wonder what I really paid for.
ALTHOUGH its roots are in Mumbai, the New India Assurance company has been operating in Britain since 1920. It has a number of offices including one at – guess where – the Lloyd’s of London building. Your policy is signed by
Mrs Neerja Kapur, the chief executive of New India in Britain. It says you are insured against loss of income resulting from ‘any occurrence of a notifiable disease within a radius of 25 miles of the premises’.
But when you lodged a claim after the Government shut down your pub, Ajul Raj, a branch manager with the insurance company, told you that your pub had not suffered any losses because of Covid-19 itself.
He wrote: ‘We do not know whether there has in fact been an occurrence of a Notifiable Disease within the 25-mile radius of the premises.’ (Yes, there has.)
Raj explained that your losses were all the fault of trading restrictions that the Government said were ‘in response to the serious and imminent threat to public health’. Those restrictions applied nationally, and did not identify your pub, your village, or any part of Devon, nor did they mention any specific cases of Covid-19 in your area.
His reading of your policy is that it could only apply if the Government had specifically identified Covid-19 in your area or at your pub, and had revealed those details to close your doors. The fact that without Covid-19 there would have been no closure order and no business interruption does not seem to count.
To me, this is like saying that on a night in 1912 in the Atlantic, more than a thousand people drowned because they could not swim, while failing to mention that they were passengers on the Titanic. If the ship had not sunk, they would have lived. And if the virus had not struck, your pub would be open for business. It is cause and effect. But to New India and Ajul Raj, the two seem completely unrelated.
However, the real giveaway line in Raj’s letter almost amounts to a confession.
He claims: ‘New India’s policies were not designed to respond in the event of a worldwide pandemic such as Covid-19.’
I asked him and his boss Neerja Kapur to show me where your policy sets out this exclusion. They did not respond.
In a nutshell then, they wrote the policy, they sold the policy, and they had every opportunity to spell out that it would not apply in the case of a pandemic, but they failed to do so.
They sold you a policy with what amounts to a secret exclusion, and since there was no way that you could know that claims in a pandemic would be refused, I believe this should operate in your favour and not theirs.
And this is before we unpick the completely impractical picture painted by New India that means you could have claimed if Prime Minister Boris Johnson had issued exactly the same restrictions but had named your pub in his announcement.
Your pub is not alone in this. Insurers all over the country are turning down claims. I am hearing that some have even used the 25-miles rule to say that claims are disallowed if there are Covid19 cases outside the 25-mile radius as well as inside.
The Financial Conduct Authority plans to ask the High Court to look over the most common wording used in business interruption policies and rule on exactly what it means.
I hope a judgment does not come too late for the pub industry and the huge number of jobs involved. When the history of these days is written, it is already clear that large parts of the insurance industry will stand condemned.
The Lloyd’s insurer that heaps shame on its own industry