COVID-19 and your insurance

Insurance is deemed an essential financial service so you can buy new policies, add to existing covers and request other changes to your cover just as you would normally, with the agreement of the insurer and as per the standard terms and conditions of the insurance policy.

Unfortunately, we’re anticipating an increase in lockdown related burglary and theft claims, so now’s a good time to ensure you have the cover you need.

Our in-house claims team is fully operational and available to manage your claim and advocate on your behalf with the insurer to ensure you receive your policy entitlement. If you need to make a claim, please contact your broker first and foremost. Your broker will coordinate with our claims specialists, who will take it from there.

If you’re not sure who your broker is, please contact us and we’ll let you know.

There is no one-size-fits-all solution because each business insurance programme we’ve put in place has been customized for the client. The best advice is to discuss your individual situation with your broker.

Business interruption policies cover financial losses arising directly from physical loss or damage to ‘insured property’ including buildings, content and stock etc. Losses resulting from the Covid-19 lockdown (site closure), such as loss of profits, are not covered.

Notifiable infectious diseases and pandemics have been standard business interruption policy exclusions since the 2003 SARS outbreak, and the industry’s realization infectious disease outbreaks and pandemics were simply too big to insure against.

Your business interruption insurance will continue to provide cover for financial losses directly related to the physical loss or damage to your insured property because of fire, flood, burglary etc., as per your policy wording.

Insurers’ responses to Covid-19 vary but, as a general guide, cover is contingent on ‘unforeseen events’, and ‘known events’ are not covered. Each insurer has a date from which they have determined Covid-19 to be a ‘known event’ and that will affect any claims relating to Covid-19.

Please get in touch with your broker if you have any questions about disrupted business or personal travel, and whether you can make a claim.

Contract works is offered on a case-by-case basis, so the best advice is to talk to your broker about your situation.

As a general guide, insurers have strict security requirements for work sites and it’s important you adhere to these requirements to meet your obligations to the insurer. Your broker will work through your policy with you and advise what you need to do.

There are still several risks to your fleet that would not be covered by third party fire and theft insurance. Alternatively, some insurers are looking to provide laid up cover for fleet and special vehicles such as trucks, buses and heavy machinery, and will consider requests on a case-by-case basis.

Please talk to your broker about the best option for you and your business.

Generally, loss of rents insurance does not cover loss related to Notifiable Infectious Disease under the Health Act 1956 or a notifiable disease under the Biosecurity Act 1993. Because Covid-19 falls within these standard policy exclusions, it’s not covered under your loss of rents policy.

Depending on your commercial lease agreement, there may be some rent relief available to you. We recommend you seek legal advice.

As a general guide, the Auckland District Law Society (ADLS) commercial lease (2012 editions) contains ‘No Access in Emergency’ clauses, which includes a Rent Abatement Clause (clause 27.5) that provides for a ‘fair proportion’ of your rent and outgoings to cease during the period you are unable to access the premises and carry out your business. You will need to seek independent advice specific to your lease agreement.

We recommend you maintain your public liability insurance cover. Public liability covers a multitude of business risks, for example: if you’re a property owner or landlord, you’ll lose your cover for landlord’s liability; if you’re a manufacturer, you’ll lose your product withdrawal cost and products cover; and if you’re a tenant, you’ll lose your tenant’s liability cover, which is often a requirement of tenancy agreements and could put you in breach of contract.

Many existing policies will also have historic extensions or additional covers that are no longer provided under new policies. If you allow your policy to lapse, it’s likely insurers will not offer such additional cover on a new policy if and when you resume cover.

We recommend you maintain continuous cover. Professional indemnity is a ‘claims made’ policy, which means you must have a valid policy in place at the time of your claim and not at the point in time the alleged error was made.  For a claim to be valid, the alleged error must have occurred on or after the retroactive date.

The Statute of Limitations period allows for claims to be made against you for up to six years after an alleged error was made. If you let your policy lapse, or you cancel your cover with the intent to resume cover in the future, the risk is you’ll be uninsured for the work you’ve undertaken in the previous six years. This exposure will then carry over to any new policy because insurers are unlikely to insure any work you’ve undertaken prior to the start date of the new policy.

Also, cancelling or lapsing your policy may well put you in breach of contract if you have signed a contract with a third party that requires you to carry cover.

We recommend you maintain your employment practices liability cover. With many New Zealanders facing redundancy, reduced wages or job loses, insurers are anticipating a significant increase in claims from unhappy employees. Most insurers have indicated they will not offer future cover to clients who have lapsed or cancelled their polices, and some have signaled they will cease to offer new cover to anyone other than existing clients.

We recommend you maintain continuous cover. Like most liability policies, statutory liability is a ‘claims made’ policy, which means you must have a valid policy in place at the time of your claim and not at the point in time the alleged event occurred, and the event giving rise to the claim must have occurred on or after the policy retroactive date.

If there is a break in cover, such as a policy lapse or cancellation, most insurers will only provide cover from the retroactive date of inception, so you won’t be covered for any event prior to the start date of the new policy.

If you have an existing life insurance policy in place, Covid-19 is covered and your life insurance policy will respond as per your policy wording.

You’re covered for medical or physical conditions, as per your policy wording, so illness related to Covid-19 is covered. But you’re not covered if you’re unable to work because of the pandemic lockdown.

If you’re worried about loss of income and how you’ll meet your essential bills, there is Government assistance available to help you through (see below).

It’s our goal to keep your assets protected and to ensure you’re in the best possible position after lockdown and the COVID-19 pandemic threat is over.

If you’re paying your premiums annually

We offer a Premium Funding facility that allows you to spread the cost of your annual insurance premium over 10 payments to help ease your business cash-flow.  There is an administration fee and an interest charge for this service.

Please get in touch with your broker if you’d like to know more about this option. 

If you’re already using our Premium Funding service

Our premium funder has paid your insurance premium to the insurer in full on your behalf, so we need your support with the continuation of those on-going monthly repayments.

If you’re concerned about making the scheduled repayments, the Government’s financial support package is designed to help.  Make sure you’re receiving the financial support you’re entitled to so you can keep up with essential bills. Your bank can also advise you about the various financial support options available.

The Government’s $12.1 billion support package is designed to help businesses and individuals with Covid-19 related financial difficulties and you can keep up to date with the latest business information and guidance here.

There is also a free Government helpline available between 8am-1am, seven days a week. 0800 779 997

In addition to the Employer Wage Subsidy Scheme, there are other practical options for businesses seeking cash-flow relief and support.  We’ve highlighted three that may be of interest to you and your business.

Small Business Cashflow Loan Scheme

The Government will provide loans of up to $100,000 to small businesses impacted by COVID-19 to support their cash flow needs and fixed costs. Eligible small businesses employing up to 50 full-time equivalent employees can apply for the loan through the IRD.

Details of the loans include:

• $10,000 to be provided to every business
• an additional $1,800 per equivalent full-time employee
• 3% interest rate for a maximum five year term
• interest free if loans repaid within a year
• no repayments required for the first two years.

Business Finance Guarantee Scheme

In partnership with participating approved banks, the Government will support targeted new loans (including increases to existing limits) to eligible businesses. Small to medium businesses with annual revenue between $250,000 and $80 million can apply to their banks for loans of up to $500,000 over a term of up to three years.

You can find out more about the scheme and download and application form here.

Business Advice Funding

The Government has announced a $25 million Covid-19 Advisory Funding package for small to medium businesses and the self-employed to be administered over 12 months through the Regional Business Partner Network (RBP).

Businesses can access up to $5,000 worth of fully funded assistance through one of the RBP affiliated advisers including advice in areas such as business continuity planning, finance and cash-flow management, human resources, and help with networking.

There are 14 RBP offices throughout New Zealand and registration is free.

Capability Vouchers

Capability Vouchers are available for eligible business owners to develop management capability. The vouchers subsidize the cost on a co-funding basis of workshops, courses and coaching, and are administered by the Regional Business Partner Network.