Wonderful news that the Supreme Court has generally found in favour of all those many tenants who in good faith insured against loss of business and whose claims were refused. The struggle has been a long and expensive battle. It was won in the lower courts but the contested by a consortium of Insurance Companies all the way to the Supreme Court. Ultimately, they lost the core arguments. Trebles all round. But we realise that for many of our subscribers this is the first time they will have made a claim for loss of business on such a massive scale.
Now comes the battle to actually get paid. Over the course of many years we have been involved in a number of client insurance claims for loss of business. Generally due to either a disastrous fire or as a result of flooding. Our role was to underpin the reality of the trade lost and the after effects (if any) on the current and immediate future trade. If you start with the basic understanding of what you face then all the better.
FIRST…Insurance Companies hate having to pay up. Look how hard they protested in the fight to the Supreme Court.
SECOND…They are in no hurry to pay you.
THIRD…They will use every legal reason to require absolute proof of the amount of the loss claimed.
The Claims department are at the heart of the relationship you will have with your insurers. There is no given time limit on how fast they need to respond. Amongst the common excuses for considerable delay are that of Covid-19 and its effects of
(a) staff shortage
(b) working from home
(c) the problems posed by the pandemic on ‘due process’.
You will hear all of them when you start to complain against the continuing delays. You will of course be reassured by the mantra of “your claim is really important to us and we are pulling out all the stops to assist in these troubling times”. If you hear this once or something very similar, well you get the gist.
The prime claim is money. The trade you have lost and the trade you should have had if the pandemic had not happened. The main problem is that there are three lockdowns to contend with and the third is still ongoing. We don’t want to flog a dead horse but there is the complexity of the Government grants and initiatives. Have you made full advantage of all the financial assistance available? Has your rent only been deferred, i.e. still yet to be paid ? What is the level of rent written off ? The list of items that can be factually proven goes on and on.
Then we have the imponderables, income that you have lost for sure but proving it is quite a different matter. The run up to Christmas is a prime case in point. If you had definitive bookings then there is proof of lost business. But how do you prove BEYOND DOUBT the loss of lunches/dinners that were not booked because of the rule of six or not of family groupings ? The Christmas office drinks parties that never happened but were guaranteed in previous years all because of working from home? The next big unknown is that of staff wages If there has been a full furlough scheme then there is a degree of certainty. But what if you have been sort of furloughing on a part time basis to provide a take away service? The kitchen brigade being used to only part capacity and being paid accordingly, or did they work for free using the furlough payments.
We are not trying to be defeatist but just bring a feeling of what you will face. All of the input factors to quantify the ultimate financial loss are there to be legally exploited/challenged by both the Insurance Company’s claims department and their loss adjustor. We hate to say it, but do not book the holiday of a lifetime on the back of your loss of business insurance pay out. It may well take years. Very few insurers make part initial pay outs. We hope your insurer is one of them.
As a final thought, we wonder if the EI Group Ltd (now Stonegate) have an insurance claim in for loss of rent if they are head lessees having done effected a sale and leaseback. If the sub lessee has not paid rent, well will they? EI still have to pay the freeholder for their head rent. Interesting…