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Law360, London (April 3, 2020, 11:52 AM BST) -- The country's largest insurers have extended the period in which a commercial property such as a restaurant can be left unoccupied, as the government-ordered lockdown threatens to leave businesses uninsured.
Direct Line, Allianz and AXA have amended the wording of commercial policies to lengthen the period of non-occupancy from 30 days to either 60 days or 90 days.
Aqueous Underwriting said on Friday it has gone further in waiving policy conditions over unoccupied status altogether, adopting a similar approach to commercial insurer Zurich.
Relaxation of the rules comes after the government ordered non-essential businesses, particularly those such as restaurants and pubs in the hospitality sector, to close from March 24. The lockdown is expected to last until at least April 13, but the government will decide whether to extend that in the coming weeks.
"It's all too clear that sadly the liquidity and very existence of many U.K. [small to midsized businesses] in the hospitality and leisure sectors will come under tremendous pressure in the coming days and weeks," Tom Hill, executive director at Aqueous, said.
"We hope that the measures we're offering our brokers will help business owners in these industries in some small way as they try to weather the impact of this unprecedented event," Hill added.
A senior lawyer has warned of the potential for litigation if insurers do not change their policies.
Aqueous, a smaller managing general agent, said Friday it has also started offering employers, public and products liability insurance cover free to its restaurant clients that wanted to start offering takeaway or delivery services.
By contrast, Allianz, one of the largest commercial insurers in Britain, said commercial clients should make contact if the property is to remain unoccupied for more than 60 days.
Direct Line said it had extended the deadline to 90 days, but advised business owners to physically inspect a property every seven days and remove junk mail and other combustible materials. However the insurer admitted that the conditions would apply only "unless otherwise agreed to be impractical" because of government restriction on movement.
Alex Rosenfield, senior associate at Fenchurch Law LLP, told Law360 that there is potential for litigation if insurers do not amend policies or give way on the question of regular inspections.
"People are now physically unable to leave their homes in order to adhere to these conditions," he said. "If a condition is impossible to comply with, which is arguably the case here, then those conditions aren't capable of being enforced by an insurer. So yes, potentially there is the possibility of litigation in future on this."
--Editing by Ed Harris.
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