Like other types of businesses, companies in the theatre, music, and nightlife space are taking a hit from coronavirus. They are perceived as ‘non-essential’ business capable of holding large gatherings indoors and coronavirus is affecting the ability to collect insurance.
Many businesses are turning to their insurance providers only to find out that their policy will not help mitigate their losses. Standard policies will not cover against business disruption stemming from the coronavirus pandemic. Business interruption is the policy most likely to protect businesses impacted by the coronavirus outbreak, but GlobalData’s 2019 UK SME Survey shows that its uptake is low, with only 17.3% of SMEs in the UK having this cover in place.
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However, business interruption policies are generally sold to compensate for damage caused by fire or floods, meaning that even businesses with such policies might not be covered. Cover for communicable diseases is normally found as an add-on to policies and is subject to exclusions.
In a move towards minimising – if not suppressing – the spread of the virus, governments around the globe are encouraging social distancing practices and banning mass gatherings. As the number of countries introducing lockdowns and war-time measures increases, governments will continue to force the closures of cinemas, theatres, pubs, restaurants, and other ‘non-essential’ venues in the hospitality and entertainment industries.
In contrast, the UK government’s laxer approach advises against visiting these venues but has yet to impose closures. However, many theatres and cinemas across the UK have announced closures prompted by mounting public concerns and reduced footfall.
Regardless of whether art venues and social clubs close due to a government order or not, the most likely outcome is that their insurance policy will not protect them. While fiscal packages introduced in a number of countries might help some of these businesses to keep afloat, the economic impact on others will force them to close permanently.
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