WORLDVIEW: The battle over insurers’ Covid-19 obligations to business

There is a battle brewing between insurers and policyholders over whether Covid-19 lockdown losses should be covered. Here's what's at stake.
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As discussed on our Inside Covid-19 podcast, there is a major battle brewing between big South African insurers like Santam and their policyholders over whether losses due to the Covid-19 lockdown should be covered.

At issue are so-called business interruption (BI) insurance policies, intended to pay out when businesses face losses due to covered events. A common example would be a fire – a business interruption policy would cover the sales revenues that the business would miss out on due to the fire-related closure (coverage for the actual physical damage caused by the fire would be a separate policy, or included as a separate matter in the business interruption policy).

Many businesses in SA – especially those in the tourism industry – purchased BI insurance that included coverage for infectious illness events (for example, if there was an outbreak of Legionnaires' disease at a hotel that forced it to close for repairs and disinfection). Now, these businesses argue that they should be compensated for losses during the Covid-19 lockdown because the lockdown was a result of an infectious disease – this is a simplification, of course, but that's the gist of their argument.

___STEADY_PAYWALL___

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