The COVID-19 coronavirus outbreak has now infected more than half a million people and that number is still rising. As well as the serious implications for people’s health, the NHS and other healthcare services, COVID-19, and the ensuing government lockdown are having an undeniably significant impact on businesses and the economy globally. As the virus has spread, it has left businesses counting the costs.
The Impact of COVID-19 on UK Business
The COVID-19 crisis presents a huge challenge for businesses and the ongoing effects so far have temporarily shut down a quarter of businesses in the UK. With 38 per cent of the businesses that are still operating saying that their sales have been “substantially” hit by the nationwide lockdown that has been in place for the last few weeks.
We are also at the beginning of a marked rise in unemployment as businesses begin to reduce staff levels to help soften the financial impact created by the lockdown measures. The Office for Budget Responsibility suggests that unemployment could rise by 2.1 million to 3.4 million by the end of June.
Governments Grants for UK Businesses During Lockdown
If you are unable to maintain your current employees because your business has been severely affected by COVID-19, you can furlough employees and apply for a Government grant that covers 80% of their usual monthly wage costs, up to £2,500 a month.
Being furloughed means that you are placed on a temporary leave of absence because your employer cannot afford to pay your wages due to the COVID-19 pandemic. However, during this time, you remain employed and retain all of your existing employment rights.
The Coronavirus Job Retention Scheme is designed to support employers whose operations have been severely affected by COVID-19, to retain their workforce, helping to protect the UK economy. This is a temporary scheme, but it may be extended if necessary.
Insurers are Working to Support UK Businesses
The spread of COVID-19 is an unprecedented event in modern times, as such, both insurers and insurance brokers understand that this will be an incredibly challenging time for UK businesses. Some UK businesses are questioning whether Business Interruption Insurance could cover them for losses incurred as a result of the Government lockdown. However, business interruption insurance is usually offered as an optional extra to business insurance.
On this subject, the UK Government said “Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.”
The FCA said in an open letter addressed to insurance CEOs: “Based on our conversations with the industry to date, our estimate is that most policies have basic cover, do not cover pandemics and therefore would have no relation to pay out in the COVID-19 pandemic”.
Despite this, insurers are working incredibly hard to support UK businesses through any claims, answering questions quickly and ensuring that legitimate claims are paid out swiftly.
It’s Important That Your Business Remains Covered
Even if your business is unable to operate because of COVID-19, do not be tempted to cancel your business insurance policy, it is important that you remain covered for a variety of risks that are still present. Such as theft or damage to stock, fire and flood damage to the business premises and financial cover if you face any legal costs.
If you were to suffer any of these whilst not being covered, you may struggle to recover from the financial impact leaving you unable to reopen once the lockdown is over. There are also some types of business insurance that you are legally obliged to have, such as employers liability insurance.
For further help and advice on Business Insurance contact the experts at Ashburnham Insurance FREE ON 0800 1696137.