Most businesses have felt COVID-19!
Whilst its had a huge impact on all of us personally, there’s no doubt that COVID has impacted pretty much every business in the UK and beyond. For some that impact has been positive financially, but all businesses have had to adapt, change working practices, implement new ways of engaging with staff, customers and new methods of communication.
The Cost of Covid!
I’m not sure how we will actually ever be able to quantify this as a country, is it the amount of lives lost, the rate of unemployment, the amount of debt the country now has, the amount of businesses that have & will cease trading? This list could go on and the metrics will continue for years.
Fortunately (or Unfortunately) businesses can actually measure the impact in hard cash. There are many ways this will show itself but it all comes down to the same thing which is money lost due to this global pandemic.
Lost revenue (either from lost or reduced sales, inability to maintain pricing, etc)
Exceptional costs (protective screens, temperature profiling equipment, new software to allow working from home)
Increased cost base (PPE, extra staff, etc)
Increased liabilities (new and extra interest on borrowing for cash liquidity)
Bad debt (customer closures and unpaid bills)
The good news is that there is now a way many businesses can recover most if not all of these loses.
A Business Interruption Insurance Claim!
For businesses that have business insurance there is now an opportunity to claim compensation for the loses they have suffered via a BII (Business Interruption Insurance) claim with their insurer.
Pretty much all claims that were being submitted to insurers were being rejected. However on the 15th January 2021 the Supreme Court ruled in favour of UK businesses, meaning that insurers will now have to pay-out on business interruption policies.
This judgement by the Supreme Court, has given renewed optimism to those same people who might now be entitled to a pay-out. This follows an appeal by the Financial Conduct Authority who brought a test case before the court of appeal and won, paving the way for more businesses to have their claims paid
Around 400,000 businesses are now entitled to compensation, with pay-outs estimated to exceed £1.2bn
The real benefit of this, is that businesses are now able to recover their loses and to restore cash liquidity with a mechanism that doesn’t require being repaid like the Bounce Bank Loan Scheme or the Coronavirus Business Interruption Loan Scheme.
Claim direct or take legal advice?
On the back of this ruling by the supreme court many businesses have gone to their insurers and have been told that they don’t have a valid claim. At this point the policy holder curses their luck and believes the insurer (why wouldn’t they).
There are many UK SMEs who have not claimed on their business interruption insurance even though they are entitled to pay-outs or have had their insurance claims wrongly rejected. The insurance companies are using exclusion clauses that do not apply to the COVID-19 pandemic to deny insured businesses the cover they’ve paid for.
Its for this reason that I am encouraging business owners to get a free valuation of their insurance policy, to help them get the insurance pay-outs they are entitled to. This comes at no cost and no ongoing commitment.
Picking the right help!
There are many firms out there starting to offer BII claims and this will only increase over coming weeks, so what are the things to look out for?
Teams that include both lawyers and chartered accountants, this is so they can deal with claims from start to finish without claimants have to seek external accountants reports for insurers.
Teams that include forensic accountants to ensure that you can claim everything that may be owed to you.
Teams that are experts in both commercial and insurance law. Its this expertise and experience that will pick out the detail in policy wording that can mean the difference between a successful claim or not.
A firm that is willing to operate on a Conditional Fee Arrangement (CFA) most of us will know this as No Win, No Fee.
A firm that will provide you with a free, no obligation, honest assessment of your potential claim, and one that provides you with all the information about the costs and risks of an unsuccessful claim.
How much should I expect to pay?
This very much depends on who you choose to represent you. Solicitors will typically have:
Base costs (the hourly rate of the solicitor)
Disbursements (fees they pay on your behalf in submitting a claim, eg court fees)
Success fees typically 25% – 35% (the percentage of any successful award made to you, normally dictated by complexity of proving loss, causation and how vigorous a defense will be anticipated)
After the event Insurance (any insurance policy you purchase to provide indemnity against the risk of paying Disbursements and/or the Opposing Party’s legal costs and disbursements;)
Barristers Fees (Some barristers will not operated under the CFA)
Some solicitors will include a % of their base costs up to a maximum of 100% in the success fee, so if you win you can expect to be liable to pay the base costs, disbursements, and the success fee together with the insurance premium for any After-the-event insurance taken out. (Normally you can also claim part of the base costs and disbursements from the opposing party)
If you lose, you should expect to pay the disbursements, any barristers costs (if they refused to enter into a CFA) and the opposing party’s costs. (A good solicitor will help and advise you regarding After the Event Insurance to protect you from some or all of these costs should you lose).
In the current climate there should be no need to pay fees or base costs regardless of outcome.
What is the process and how quick is it?
The process itself is actually really quite easy.
Firstly check you have Business Insurance.
Answer a few short questions about your business and how much it has lost due to Covid-19.
Send a copy of your policy and schedules to the solicitors for them to review at no cost or expense to yourself.
Be available to take a call from the solicitor to discuss your policy, the validity of a claim and the likelihood of success.
If there is a valid claim for you, review a funding agreement from the Solicitor and sign the engagement document.
Let the solicitor handle your claim on your behalf.
In terms of timescales it can be anything for circa 4 weeks up to 12 weeks depending upon the ease of the case.
The volume of claims will only increase and its expected that the vigour of defense will increase too as insurers find themselves having to settle many claims. The current success rate of claims is approx. 50%-70% depending on the quality of the partner you choose.
I hope this article has been informative & useful and I wish everyone who wants to pursue a claim every success. This may just be the lifeline that some businesses need to kick start their recovery.
If anyone wants to have their potential claim assessed, I have access to an incredible team who have been leading the way with these BII claims. Just contact me on the email below, I’ll ask you a few short questions, send me your policy documents and within a couple of days the solicitors will be in touch directly with you to discuss your case.