Corona: Insurance not paying for loss of turnover?

If the business is shut down, any loss of revenue may be covered by business interruption insurance or business closure insurance.

Whether sales losses due to corona are covered by business interruption insurance or business closure insurance depends on the individual insurance policy.

If you have also submitted your loss of revenue to the insurer, but the insurer has refused to pay, please contact our attorneys for insurance law.

We will check whether the insurer must pay your loss of turnover due to Corona. You can reach us at +49 40 / 369615-0.

Business closures can be insured

Due to the current developments due to the Corona Pandemic, companies are experiencing business interruptions and sometimes even closures. The following cases, for example, are conceivable:

• Closure of the business due to official orders and general orders (e.g. in restaurants, retail businesses and hotels)
• Ordering an official quarantine for all company employees
• Order a canteen for the farmer because of Corona
• Loss of sales due to reduced order situation
• A supplier in the supply chain fails because of Corona, which leads to an interruption of operations

Whether these business interruptions or closures are actually insured depends entirely on the individual insurance policies.

In principle, a distinction must be made between

• Business closure insurance and a
• Business interruption insurance / loss of earnings insurance

Which insurance is applicable has to be examined in each individual case. In any case, refusal of insurance cover by the insurer should not be accepted without verification. In this way, companies can submit their loss of turnover to the insurer if necessary, thus at least partially compensating for their fixed costs.

Closure insurance must pay for loss of revenue

It is conceivable that companies may have taken out separate business closure insurance. This is available as an additional module to the business interruption insurance and sometimes also offers insurance cover in the event of a corona crisis. To this extent, plant closures due to infectious diseases are sometimes also insured under the terms and conditions. The object of the insurance is to ensure that the insured business suffers effects due to notifiable diseases as a result of official instructions. This is particularly the case if the insured business is to be closed. This closure is deemed to be the same if all employees are banned from working.

The business closure insurance covers cases in which the closure is due to an official order. Such insurance covers not only the costs incurred by the closure ordered by the authorities, but also the loss of profit.

This insurance always applies if

• a closure of the insured business exists,
• because of the Infection Protection Act,
• and because of the occurrence of a notifiable pathogen.

Insurer does not pay for loss of Corona sales?

Insurers, however, currently refuse to pay under the business closure insurance. This refusal is sometimes based on the following arguments:

• the pathogen is a new virus that is not mentioned in the Infection Protection Act, which is a prerequisite for insurance cover
• a national order to close down undertakings is not sufficient according to the terms of the insurance, but the individual undertaking must be closed down by order of the authorities
• the insurer is accused of gross negligence
• the insurer contests the amount of the loss and the loss of turnover

We do not believe that this argumentation is correct in its generality. Insurance cover must also be granted for new types of pathogens, since the insured event is the same. However, it must be checked whether the insurance policy applies to all or only certain pathogens that are mandatory to report. In some cases, the insurance conditions may also contain a list of specific named diseases and pathogens, although COVID-19 is not mentioned here because it is a novel pathogen. Other insurance policies, on the other hand, keep the definition of the pathogen much more open.

Insurance cover under the business interruption insurance unlikely

Whether the business interruption insurance pays depends to a large extent on the insurance policy.

Therefore, whether loss of sales can be claimed under the business interruption insurance because of Corona can only be determined once the insurance policy has been reviewed.

As a rule, the business interruption insurance only pays if business interruptions occur due to material damage. Insurers currently claim that only business interruption due to property damage is covered and that viral diseases and pandemics are not among the insured risks.

However, especially in the case of companies, there are often individual agreements on the insurance conditions which can sometimes considerably extend the cover. It is therefore necessary to examine whether measures relating to corona epidemics are covered by insurance.

What is business interruption insurance?

Business interruption insurance or loss of earnings insurance pays if a business is shut down for a longer period of time.

Business interruption losses are ranked 2nd to 3rd in the world for the most important risks. This can have serious consequences for the company. Companies usually have high fixed costs that must continue to be paid when operations are shut down. The purpose of insurance is to compensate for the financial consequences of an interruption of business activity caused by a defined loss event. This is why business interruption insurance is often referred to as loss of earnings insurance.

Loss of earnings insurance or business interruption insurance comes into play when work processes cannot be carried out as usual.

The business interruption insurance can take over

• Costs of repairing damage to property
• Wages and salaries of employees
• Running costs such as rent, electricity, insurance premiums
• Missed profits based on past balance sheets

Business interruption for companies

Particularly in the case of small businesses (small business interruption insurance), a flat-rate sum insured is fixed, which is then paid as compensation. As a rule, this amount is around € 500,000. Missed profits or other fixed costs can be covered by this lump sum. Although this lump sum is a considerable simplification, it does entail a considerable risk of underinsurance. The legal basis for the small business interruption insurance are the Supplementary Conditions for Simple Business Interruption Insurance (ZKBU 2010) and the General Insurance Conditions (AVB).

For medium-sized companies (usually up to approx. 50 employees), a medium business interruption insurance is offered. This is subject to the “Special Conditions for Medium Fire Business Interruption Insurance” (MFBU 2010). Here, too, the sum insured is calculated as a lump sum. Here, the turnover less the cost of sales with a percentage surcharge (as a precaution) is taken as the insured sum.

For industrial companies the so-called large business interruption insurance is offered on the basis of the FBUB 2010. In addition, individual agreements are still made in the written conditions.

Business interruption for self-employed persons

It is also important that there is a business interruption insurance especially for self-employed and freelancers. This is designed to keep the financial risk of a partial or total business interruption for self-employed persons as low as possible.

In particular, this insurance compensates for lost operating profits and covers ongoing fixed costs such as rent, salaries and personnel costs.

In particular, this insurance can intervene if the farmer is unable to continue his business and his operations are therefore at a standstill.

Dieser Artikel wurde am 30. September 2020 erstellt. Er wurde am 30. September 2023 aktualisiert. Die fachliche Zweitprüfung hat Rechtsanwalt Dr. Tristan Wegner durchgeführt.