Reluctant insurers could be ‘final nail in the coffin’ for pubs

Many insurers have claimed that the Government’s order for all pubs to close to limit the spread of the pandemic does not come under the terms dictated by their contagious disease cover.

This is the case with the Sloop Inn in Barton-upon-Humber, Lincolnshire, whose operator David Strange has said the Government needs to place pressure on insurers to pay out.

A lack of further support and insurance payments will be the “final nail in the coffin” for many pubs across the country, the publican said.

Insurer letter

His insurer New India Assurance detailed why it did not believe the loss of income arising from the closure of the site did not fall within the cover provided by its policy for pubs.

It said that even if there had been an occurrence of the ‘notifiable disease’ within a 25-mile radius​ of the pub, cover would not apply as this was not the reason for closure.

The insurer pointed to the Government’s order that required pubs to close “in response to the serious and imminent threat to public health” posed by the presence and spread of the virus. “The regulations did not result from any particular occurrence of Covid-19, still less the occurrence (or occurrences) of that disease that may have happened within the 25-mile radius of the premises,” New India said.

Publican Strange called this reasoning “absolutely ridiculous”, and said it had taken nine weeks to receive the conclusion from the insurer.

He has been running the pub with his wife for 17 years but says the future is unclear.

He said: “There will be a lot of pubs that won’t survive because it has been a really tough two years in this industry. This will be the final nail in the coffin unless there is more support or insurance companies pay out for people who have got it.

“What do you have the insurance for? The Government should make them pay out and pressure should be put on them to actually provide cover for the risk we took out insurance for.

“We are covered for contagious diseases but they are saying, because of the wording, the Government shutdown order doesn’t apply.”

Survival issue

Strange’s pub completely shut down on the evening of Friday 20 March after Boris Johnson ordered pubs to. 

Although he has received the Government hospitality business grant of £10,000 and furloughed his staff, he is still facing the pressure of continuing costs and the uncertainty of reopening, like many.

He added: “We’re not at all happy. That’s what we get insurance for, so we can survive. [This is] paramount to whether we can survive or not.”

Research from the British Beer & Pub Association (BBPA) showed the majority of pub operators (56%) who had received decisions on their business interruption coverage claims had been unsuccessful. 

The Financial Conduct Authority (FCA) said it would obtain court declarations for insurance cases where there was contractual uncertainty preventing pubs from receiving business interruption pay-outs.​

• ​​Read the latest digital edition of The Morning Advertiser​ – for free – by clicking here​.​