Short-term let firms accuse insurers of holding back payouts

UK: Many small businesses have accused their insurers of holding back payments for financial losses due to coronavirus.

Hospitality businesses, alongside The City Watchdog and the Financial Court Authority, claim insurance firms have used government coronavirus grants as an excuse to reduce payouts.

According to The Telegraph, small firms have received communication saying that their payouts will be subtracted the sum of the aid they have currently received. These businesses accuse insurers of profiting from taxpayer moneys and acting disgracefully.

Insurers responded to the accusations noting that anything which limits the loss to the business further limits the amount a policyholder can claim in response. The case will be going in front of the High Court this week, with judges making a decision based on policy wordings and how and when insurance firms will need to pay.

A spokesman for the Association of British Insurers said: “For claims relating to Covid-19, insurers will generally expect businesses not to claim for losses which are already adequately covered by any government grants they have received.”

Hospitality businesses have been particularly affected by this, as many have received government grants to keep their businesses afloat. Furthermore, in new industries like short-term rentals, specialist insurance is less common and policies that do exist are often less attuned to the pandemic.

Alistair Handyside, of trade body PASC, said: “Many are now reluctant to make a claim, even though they are rightfully entitled, having paid their premium. We expect insurance companies to honour their contracts and not behave so poorly.”

Beth Bailey, a Cornwall holiday let operator, said to The Telegraph: “NFU Mutual decided in favour of our claim, however we were shocked to learn that they were going to deduct the Government grant we had been awarded from our final claim. This means our payment was severely depleted.”

Bailey claimed that when speaking with NFU Mutual, her insurer, she was only able to secure a partial payout due to a £10,000 emergency grant. This is in light of her business’ obligation to pay out £52,000 in refunds.

NFU has notably not been included in the upcoming court case.