We feel let down by insurers
Q A B&B owner thought he was covered by his policy when the pandemic forced him to shut his door
I RUN a B&B in the Highlands and made a claim on our business interruption insurance when we had to close earlier this year.
I have checked with a friend who was an insurance professional for years and from his point of view, our case is clear. On March 4, the Government added Covid-19 to the notifiable diseases. And soon after, as we know, we were shut down and lost all our income. Since we are seasonal we bridge the winter gap with pre-booking payments which keep us in liquidity. Obviously we had 90 per cent cancellations because of the lockdown. Few people moved their booking to another date. Strangely enough, the insurer made no effort to contact us about the business interruption insurance. We investigated and realised that we have a clear claim as it says in the wording of our policy. Since then, they seem to drag out the case. We don’t think we have been treated very well, considering the many sleepless nights and a £50k loan we had to take out to survive. In the meantime, we continued to pay our quite substantial monthly premium. Additional to that, we had to pay last year’s premium as well, since Hiscox failed to take the direct debit due to an administrative mistake from their side. We received a nice hamper and apologies in the post but it affected our liquidity seriously – especially if you have no income at all.
One would expect more effort and customer communication on a professional level, as well as payment of the claim.
Let me know what you think or if you need anything else. Gordon Pringle (name changed)
A THIS is a really interesting situation, and one which has now made its way to the High Court in London.
On first inspection you, and your insurance broker friend, seem to be correct. The paperwork you showed me from Hiscox clearly states that you will be covered, and I quote, because of your “inability to use your home due to restrictions lasting more than 72 hours imposed by a public authority following an occurrence of a notifiable human disease”.
To your mind, that is what happened. You run a bed and breakfast business and the Government told you to stop allowing people into your house, so you had to close that business, which has caused all of the issues that you describe in your email.
Unfortunately your insurer, Hiscox, and other insurers faced
with a similar situation, took a different view.
When I spoke to Hiscox at first it said: “We recognise these are extremely difficult times for businesses and we are paying claims that are covered by the policies we issue fairly and quickly.
“We are committed to seeking expedited resolution of any contract dispute which is why we welcomed the FCA’s initiative and have agreed to assist the FCA by participating alongside other insurers in the process.
“Our goal is to provide certainty for businesses on the application of policies as quickly as possible.”
The FCA (Financial Conduct Authority) initiative they refer to is a case that has just completed in the High Court in London, in which eight insurers were arguing with their policyholders about the wording of policies like yours.
I knew about the case and felt that even though it was right to test the waters, which is why the case had been brought, your policy wording was quite clear.
I went back to Hiscox and asked them for further clarification.
This time it said: “Like others in the insurance industry, the standard business interruption wording on our property policies does not provide cover as a result of the general measures taken by the UK Government in response to a pandemic. The policies were not designed, written or priced to cover these circumstances”.
I think that’s a bit of a fudge. It’s not your fault as a policyholder that insurers don’t make their policy wording clear enough, or don’t anticipate events that could provoke a series of claims that they don’t want to pay.
Having said that, if the court rules against them, it could be catastrophic in terms of the amount of cash they would have to pay out.
That doesn’t help you, and I can only hope that when the court rules, hopefully next month initially, it will provide some clarity for you.