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Most UK firms not covered by insurance, even if instructed to close

The Association of British Insurers have said that most companies that suffer a loss of sales or shut down due to the coronavirus pandemic will not be protected by their insurance policies, leaving firms exposed to bankruptcy even if the government orders them to close.

Policies that protect companies from closure following a pandemic are rare the ABI said in a letter to the business, energy and industrial strategy select committee.

They also said that standard policies excluded cover for a loss of sales related to pandemics and only a few businesses pay the extra to include them.

The submission follows demands for the government to intervene and force hotels, pubs, gyms and cinemas to close, allowing them to claim on clauses in their insurance policies for “business interruption”.

Yesterday, Boris Johnson urged people to avoid all unnecesary contact but stopped short of ordering businesses to close, just encouraging people not to go to them.

Chair of the committee, Labour MP Rachel Reeves, said: “The ABI says most policies don’t cover pandemics, so even if the government mandated businesses to close, they won’t be able to make a claim. They won’t be covered.”

Martin McTague, head of policy at the Federation of Small Businesses, said it was his experience that very few small and medium-sized businesses bought insurance to cover business interruptions: “Most of them think very short term. They don’t think about these things very far ahead.”


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