Insurers MUST pay pubs for Covid losses

WE’RE WATCHING YOU

LAST May, I reported the dire situation faced by a reader who runs a small country pub in Herefordshire. During the first lockdown, he was forced to close his doors and was struggling to keep his business alive.

Fortunately, he had insured against this. His policy covered him against any closure caused by ‘ contagious or infectious human disease, an outbreak of which a competent public authority has stipulated shall be notified to them, manifested by any person whilst at the premises or within a 25-mile radius of it’.

However, when he made a claim, his insurers at Lloyd’s syndicate DTW1991 called in loss adjusters Woodgate and Clark and they decided the policy did not really mean what it said.

The pub had not lost a penny because of Covid, they ruled. Drinkers had simply chosen to stay away because of social distancing.

And in any case, they added, the policy only kicked in if there had been a Covid case on the premises. Loss adjuster Ian Hartley later admitted that this last excuse for turning down the claim was nonsense, but he shifted the goalposts yet again, alleging that the insurance only operated if the pub had been closed by ‘ a competent authority’ following a ‘specific local occurrence’. Again, this was pure invention by the loss adjusters. The policy included no such condition. Woodgate and Clark were backed by the Lloyd’s syndicate though, which was keen not to pay out. It cl ai med t he pol i cy was onl y intended to cover a local health crisis, not a national pandemic.

But then it tried to worm its way out of paying by telling the pub owner that there was no reason why even a local outbreak of Covid cases would have caused any interruption to his business. And DTW1991 also alleged that the Covid virus amounted to ‘contamination’, and was not infection at all, so was not covered by insurance.

Since then, the Financial Conduct Authority has shown what it can do to help consumers if it really tries.

With remarkable efficiency, it rushed a case through the High Court and right to the Supreme Court – and won.

In effect, judges told insurance companies to stop playing with words and start paying up.

The FCA has now ordered insurers to review claims they had turned down. And it has just put a ‘ policy checker’ on its website, explaining what policies really mean, rather than what insurers would like them to mean.

Woodgate and Clark have told the pub owner it is likely his policy does provide cover after all, and the Lloyd’s syndicate is reconsidering his claim. But there has been no apology for rejecting it last May, no apology for the spurious excuses that were invented, and not a word of regret for putting the pub owner through months of financial stress.

Woodgate and Clark, and Lloyd’s syndicate DTW1991, were invited to comment but did not respond.