Pandemic cover is life or death for our hotel but our insurance won’t pay


My wife and I own a hotel which we had to close on 20 March. We have “business interruption” insurance cover with QIC Europe which specifically includes “any occurrence of notifiable human disease” within 25 miles of the premises.

Even though there has been a number of confirmed cases less than 20 miles away, when we tried to claim, we were initially told that we were not covered as there had not been any cases of Covid-19 within 25 miles of us.

After weeks of chasing, we were then informed, in a letter full of legal gobbledegook, that I don’t understand that we cannot claim. This is despite the terms of the policy being quite clear.

The lockdown means that we are unable to generate any profits during our best season, which is essential to carry us through the winter months. The money from the insurance could mean life or death to this business.
CD, Powys

The letter refusing your claim is a masterpiece in obfuscation. It starts by quoting irrelevant clauses about cover for damage which renders the hotel uninhabitable and declares that Covid-19 does not constitute damage and that your hotel is not uninhabitable.

It then, after a baffling detour via murder, suicide and defective sanitation, insists that the relevant clause about notifiable human disease is invalid because indemnity is only provided “as a result of” such disease. Those three words, says the letter, mean that there “must be a direct and demonstrable link between the losses being claimed for and the occurrence of the notifiable human disease”.

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Ignoring its own wording about the 25-mile radius, it concludes that there’s no evidence of such a link in your claim because there has been no confirmed case of Covid-19 at your hotel. Finally, for good measure, it adds that the policy “does not cover losses that result from the government “lockdown”, any measures of social distancing, lack of demand, reduced footfall or general downturn in public consumption”. Nowhere are these mentioned in the extensive list of exclusions in the terms and conditions.

QIC tells me its business interruption policy is “not designed to cover pandemics”. When I pointed out that pandemics aren’t mentioned in the terms and conditions, it declined to comment.

The regulator, the Financial Conduct Authority, has received so many complaints from traders whose insurers appear to have been rewriting the terms of their “business interruption” cover, that it is bringing a test case to challenge the refusal to pay out. It has invited evidence from affected policyholders and hopes that the judge’s ruling on the interpretation of policy wording will provide a basis for other claimants.

You, in the meantime, have complained to the Financial Ombudsman Service which can decide whether you have been treated fairly.

If you need help email Anna Tims at your.problems@observer.co.uk. Include an address and phone number. Submission and publication are subject to our terms and conditions



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