Shops that have shuttered due to COVID-19 may not be covered by insurance. Photo: Region Media.
Businesses that need to close due to the COVID-19 pandemic are being advised to check their insurance policies before shutting the doors on their premises or worksite.
With many empty worksites being subject to thefts and attempted break-ins, a leading Canberra insurance broker says businesses need to be aware of the implications of shutting down as their policy may be voided, especially if they fail to advise their insurer of the changed circumstance.
Key issues include how insurance policies deal with staff working from home, changes to business income and evident changes in the risk profile of the insured company.
Peter Chamberlain of allinsure said the insurance industry is changing its policies and approach, sometimes daily, to deal with the changing nature of the coronavirus. He said there is much disparity among insurers.
“We’ve seen our insurer partners respond to the current circumstances in differing ways,” Mr Chamberlain told Region Media.
“CGU, Allianz, QBE and Vero have this week provided effected businesses with extensions to their cover, albeit with subtle differences and each requiring the client to apply for the extension, whilst other insurers are yet to indicate what if any relief or help they may provide.
“The key thing is that if you don’t have a broker, or that broker is not proactively providing you with information, be concerned, because you don’t know what you don’t know.
“I’m discovering new scenarios and issues sometimes by the hour.”
He said one of the biggest issues is to know whether a building is still insured or what conditions the insurer will impose if the premises become unoccupied.
Mr Chamberlain said, while policies differ, they all include a Duty of Disclosure which requires you to inform the insurer should the premises become vacant. Failure to do so may mean the business may not be covered for theft, malicious damage or fire or that the insurer may impose a substantially higher excess should a loss occur.
“Check your policies before you close your business,” he said. “If you have an insurance broker, speak to them. If you have bought your policy direct, you should go to a professional broker for advice as they are best positioned to understand the different approach each insurer is implementing.”
Mr Chamberlain said during the global financial crisis there was an increase in thefts from empty work sites.
“Quality brokers have been lobbying insurers for weeks to change the conditions of policies to cover situations where businesses have been forced to shut down.
“Pleasingly, these changes now are starting to be introduced by some insurers,” he said.
“I’m discovering new scenarios and issues by the hour,” says Peter Chamberlain of allinsure. Photo: File.
Mr Chamberlain says simple changes to business policies can bring immediate savings for cash-strapped businesses, as any change is also a change in risk. For example, workers’ compensation premiums are often reduced as wages fall.
A business should also advise its insurance company of changes to its operations, such as a restaurant switching to takeaway or home delivery instead of in-house dining.
If businesses are not holding as much cash or stock, premiums may also be lower.
The Insurance Council of Australia (ICA) last week welcomed the release of worksite guidelines by the Housing Industry Association which provide greater peace of mind to businesses and property owners who need to have builders in their premises during the pandemic.
ICA Head of Communications Campbell Fuller said builders and contractors are able to perform their professional tasks under the current COVID-19 rules by observing nine guidelines developed by the HIA.
“Observing these guidelines will ensure insurers and their contractors can continue to help the community where buildings are damaged and repairs are required,” Mr Fuller said.
The nine guidelines are:
- Applying social distancing measures on worksites
- Meeting government self-isolation rules on and off worksites
- Keeping the property owner informed of all COVID-19 prevention measures including site management plans
- Isolating construction areas from non-building areas
- Managing project schedules to reduce the number of trades on-site at the same time
- Ensuring workers have access to appropriate personal protection equipment
- Ensuring workers have access to appropriate hygiene and safety facilities
- Encouraging contactless payments and deliveries, and travelling off-peak
- Organising site inductions and updates on the latest government requirements.
Mr Fuller said some insurers have temporarily placed an embargo on the sale of landlord insurance policies, or are adjusting what can be covered in future policies due to the potential impact on landlords, tenants and insurers.
“These guidelines are supported by the insurance industry, and most insurers are making them a requirement of any insurance work. They require good communication with the property owner and all workers, along with constant awareness and vigilance.
“This is especially important in hundreds of communities that have felt the impact of bushfires, hailstorms, floods and storms during the 2019-2020 summer of natural disasters, which have resulted in more than 252,000 claims worth $4.6 billion in claims,” Mr Fuller said.
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