It should be emphasized immediately that the coverage of damage caused by the termination of the business activity depends primarily on the provisions of each individual insurance policy and thus may differ from one insured person to the next, even in cases of concluding an insurance policy with the same insurance company. Varying outcomes can arise in cases where insurance companies made additional commitments that would cover damage in cases of emergency situations, force majeure and the like. In determining the extent of the coverage, it is also necessary to consider whether the general terms of business or additional commitments explicitly exclude damage caused by an epidemic or damage caused by government measures, as Article 953 of the Obligations code (hereinafter: OZ) clearly states that insurance companies do not cover damage, which is explicitly excluded.
Cases of coverage for such loss events are rare, as insurance companies generally do not accept liabilities beyond a pre-determined scope of insurance, and so far, insured persons have not foreseen the occurrence of situations in which we have found ourselves in the wake of the CoVID-19 epidemic. In the event that a company or a natural person has entered into specific, additional arrangements with the insurance company, the possibility of compensation may be justified, depending on the content of the separately added provisions.
For the purpose of preparing this overview, we have reviewed the (current) general terms and conditions of the three largest insurance companies in Slovenia and found that they offer three relevant sets of insurance for downtime in operation or performance of activities, namely insurance of operating downtime due to fire, insurance of operating downtime in the service industry and machinery downtime insurance.
In view of the specific circumstances of the current situation, we estimate that there is very little chance of successfully claiming damages arising from the inability to do business in order to prevent the spread of CoVID-19 when insuring operating downtime due to fire and insuring operating downtime due to machinery conditions.
In our opinion, a greater possibility of enforcing such claims exists in the insurance of operating downtime in the service industry. In this context, the insurance company covers the business expenses incurred due to a longer and more serious illness of employees. Thus, this contractual provision is clearly intended only to cover the costs of persons who could not perform their services due to an infection or a suspected CoVID-19 infection. The insurance does not cover damage caused by the prevention of the spread of the disease, but at the same time, the cost of prevention of the spread of this disease is not explicitly excluded from the policy. Namely, only common diseases caused by colds, the flu, etc. are explicitly excluded from the policy. The possibility of success in this case depends heavily on the interpretation of the obligation of an insurance company under Article 953 of OZ to explicitly exclude cases where its obligation does not guarantee coverage.
However, everything described in this article does not in any way mean that insurance companies will not be held liable for damage incurred by insured companies. Companies may have suffered damage as a result of the non-delivery of goods, increased demand for the purchase of additional materials (such as protective masks, gloves, disinfectants, etc.), spread of illness among workers in the workplace, cancellation of special events, perishing of perishable goods, cancellation of orders or incapacity to execute them, or inability to pay for performed services. There is a huge number of such concrete cases and they are are related to the consequences of preventing the spread of CoVID-19 or even as a consequence of the disease itself.
In such cases, no business downtime insurance is required as they may be covered by other insurance policies or agreed coverage that includes (or at least does not exclude) the occurrence of the damage incurred. As a result, we advise all insured persons to carefully review the provisions of the concluded insurance policy, assess whether it is possible to include damage caused by a loss in business under this policy, and carefully examine all relevant facts and circumstances that justify compensation for damage in the case at hand.