Business owners: how to manage and mitigate insurance risk during Covid-19
This article is part of our Covid-19 information portal. Read more here: https://www.alanboswell.com/covid-19/
Business owners continue to face new and evolving challenges as the Covid-19 pandemic develops. With changing restrictions, staff working remotely and ongoing financial uncertainty, it’s important to have the right insurance cover in place so you’re ready for whatever comes next.
We’ve caught up with Phil Thorpe, Director, and Lucy Frost, Claims Manager, at S-Tech Insurance Services, to find out what business owners can do to make sure their business is protected, their premises are secure and what types of claims to be aware of during these unpredictable times.
Employees have taken office equipment home – is it still covered by business insurance when it’s out of the office?
Phil: If your staff have taken equipment home to be able to carry out their work, the first thing to do is to notify your business insurer. We’re finding that, due to the current situation, most insurers are relaxed about providing cover to business assets in employees’ homes. After all, the value of the equipment doesn’t change once it leaves the workplace. In fact, the risk of it being damaged in an employee’s home is probably marginally lower because items are spread across multiple locations as opposed to a bulk of expensive equipment in one place.
Many offices are empty or operating with skeleton staff, how does this affect insurance?
Phil: Most insurers have a 30 day clause which says if there’s nobody is in the office for 30 days, cover will be restricted. Or there might be rules in the policy, like making sure the water is turned off or someone is visiting the premises weekly to make sure it’s okay. There’s also an increased risk of theft but if you have security alarms or cameras this will reduce the risk from the insurers’ point of view.
Lucy: The most important thing is for business owners to tell their insurer or broker if the circumstances have changed – whether this is the business premises being empty, or operating with less staff. Each insurer will have a slightly different approach but, in our experience, most of them have been understanding and accommodating.
The most important thing is for business owners to tell their insurer or broker if the circumstances have changed.
Now that we know that working from home is not just a temporary fix, what is the biggest challenge business owners need to be aware of?
Phil: The biggest risk with working from home is data security. In the workplace, the company has responsibility for all of the data security arrangements, and will have firewalls and methods of transacting and processing data securely. But as soon as employees start working from home, then the business could become reliant upon an employee’s own home data security arrangements. This issue is also exacerbated by the fact that people are trying to do their normal job but not in their normal working environment. Cyber insurance can help protect against these risks and we always highly recommend businesses have a policy but, irrespective of that, making sure employees follow standard business protocols when working from home is a challenge that employers need to get to grips with.
Lucy: Employees might be using their personal IT, either because their employer can’t provide the equipment for home working, or they’re using it as a workaround so they can keep carrying out their duties. Home systems are particularly vulnerable to hacking by cyber criminals – if an employee is sending customer data or sensitive information on an insecure system, they will have inadvertently put that secure information into a high risk device. IT teams put protection in place for a reason and it’s important to make sure your employees understand that.
The last few months have been very unpredictable for businesses – what kinds of claims are you seeing, or expecting to see in the coming months?
Lucy: We’ve seen a rise in claims relating to employment disputes. There are clients who are looking for advice around redundancies due to the financial impact of Covid-19. And then often, sadly, those lead to people claiming for things like unfair dismissal, if they don’t feel that the redundancy has been handled correctly, or if they feel that they were unfairly selected.
Similarly, when people leave a business, their loyalty to the company can end. Then we see an increase in claims for things like injuries. Somebody might have had an accident at work in the past but they didn’t want to do anything about it. Now, they’ve been made redundant and they’re worried about money so they’re talking to a lawyer about making a claim.
It’s difficult to predict what claims will come up and it’s still unclear whether people will be able to claim for contracting Covid-19 in the course of their work, or from visiting a business such as a restaurant or care home. Whether those claims will have any merits is another matter, but that doesn’t mean it won’t take time and money to investigate those claims.
It’s still unclear whether people will be able to claim for contracting Covid-19 in the course of their work.
Employment claims aside, existing claims are increasing. As we’ve mentioned, water damage, pipes freezing over winter, and theft claims rise when workplaces are unoccupied. Cyber security related claims for things like cyber-attacks are rising too.
There has been a lot of media attention surrounding the way insurance companies have responded to business interruption insurance claims which have arisen as a result of the coronavirus, as only a small minority of claims have been accepted. While most policy wordings are explicit in their lack of cover for this type of global pandemic, the Financial Conduct Authority (FCA) accepts that there are genuine doubts over the interpretation of some wordings. There is currently a test case going through the courts and we hope that some of our clients will benefit from its outcome. We will continue to help clients on a case by case basis, pushing for cover wherever possible.
We will continue to help clients on a case by case basis, pushing for cover wherever possible.
What resources are available to manage or mitigate the risk of having to make a claim?
Phil: You may have either employment practices insurance or legal expenses included in your business insurance package. In many of these policies, you’ll have access to a legal helpline which can provide advice to guide you through the redundancy process or support you if there is a claim. Many cyber insurance policies come with a wealth of resources so definitely make use of that.
Lucy: There are things you can do right now to mitigate the risk of a cyber-attack. Check what devices your staff are using and make sure they are only using authorized business equipment. Prioritise software security updates. And have those conversations with your staff – make sure they understand why they shouldn’t be leaving sensitive data lying around at home, confirm that everyone is following the correct processes and educate them on how to spot phishing links and cyber risks.
Phil: Don’t forget your risk management – whether that’s through a risk management company or health and safety advisor. Keep your policies current and updated regularly, especially with the rules changing so often right now. Also consider putting together a standalone working from home policy to thoroughly cover off those risks.
Don’t forget your risk management, keep your policies current and consider putting together a standalone working from home policy to cover off those risks
To finish, what is your final message for business owners right now?
Phil: Businesses need to regard the home working environment in the same way as they do the normal working environment. Check that standard protocols are still being followed and let your employees know they can talk to you. It can be isolating to work from home so check in with your staff and see how they’re coping. Keep those lines of communication open.
If anything at all changes in your circumstances you need to tell you broker or insurer. They will be able to tell you what you need to do to make sure you’re still covered. Then, if you do have a claim, you won’t suddenly find yourself with the insurer turning round and saying ‘no’.
Lucy: My final message is try not to get so caught up with what’s happening that you lose focus of your key duties. Get advice when you need it and just keep talking; to your staff, to you broker, to your insurer. Help is out there and as long as we all keep communicating with each other, that’s the best way to get through this.