The next in SATIB’s series of FAQs as they focus on some of your most pertinent questions.
If I have Business Interruption cover, does my policy cover me against losses my business may incur owing to interruptions caused by the COVID-19 outbreak?
Business Interruption cover is there to provide cover against losses you may suffer because of your business being interrupted following an event for which you have bought cover for, such as a fire, earthquake or storm damage.
This means there is generally no cover against business interruptions caused by uninsured events, such as an economic crisis or a viral pandemic.
This is not unique to specific policies and is the norm on general short-term insurance policies across the world. A policy may have an extension to the Business Interruption section that provides cover for losses arising from “Prevention of Access/Denial of Access” – the above applies to this cover extension as well in that it too needs to be caused by an insured event resulting in damage to your property. Your policy may also have an extension to the Business Interruption section for “infectious/contagious diseases”. This extension does not require physical damage to your property and may provide limited cover, subject to the fulfilment of the terms and conditions of this extension which differ across products.
A material term of this extension is often the radius from the origin of the outbreak within which your property must be located. Your insurance advisor is best placed to check this extension and advise you specifically on the product your policy is based on. We understand that the tourist numbers are diminishing and the impact on your business (like on ours) is significant.
What about all the cancellations I am receiving from my customers?
Many of the queries we have received relate to loss due to customers cancelling bookings because of the pandemic. To minimize losses, we advise you to review your own cancellation conditions in your contracts with your customers to establish if you are required to refund. If your cancellation conditions do not require you to refund, then you could consider allowing customers to rebook for a later date and/or establish if their loss could be recovered in terms of their travel insurance policy.
Does my insurance cover force majeure?
A force majeure clause (French for “superior force”) is a contract provision that relieves the parties from performing their contractual obligations when certain circumstances beyond their control arise, making performance inadvisable, commercially impracticable, illegal, or impossible. This clause may well be in your contracts with agents/buyers and if they activate it, it will typically mean you are obliged to refund deposits/payments in full. This is a contractual matter and not an insurance matter. There is no cover and you should consult your legal advisor in this regard.
How would insurance respond to a national shutdown?
A direct order by Government to shut down your operation is not covered by insurance. Historically, other countries have seen government release funds to ease the financial exposure and we have seen initiatives put in place by our own Government to ease the pressure in certain segments, but these will certainly not be accessible to all.
As a tour operator, what is my legal liability exposure because one of my customers transmitted the virus to others?
According to the opinion prepared by Advocate Stefan De Beer (and available on firstEquity Insurance Group’s COVID-19 website), liability would depend on various factors and would be determined on a case-by-case basis. That being said, and circumstance dependent, it is unlikely that you would be found liable for the spread of the virus provided you took reasonable precautions, in the circumstances, to minimise this.
Disclaimer: The moment the World Health Organisation (WHO) declared COVID-19 as a global pandemic, it had an impact on all insurance policies and reinsurance policies. Specific queries regarding impacts on your cover will need to be dealt with on a case-by-case basis and we would therefore recommend that you contact your insurance advisor to discuss your risks and risk management implications.