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Law360, London (March 17, 2020, 11:56 AM GMT) -- The British government's decision to strongly advise citizens to avoid bars and restaurants, rather than order they be shut down, to stop the spread of the coronavirus, will be "catastrophic" for thousands of businesses as they will be unable to claim on their insurance, the hospitality sector warned.
Industry group UKHospitality is warning that pubs and restaurants could be at risk as a result of the British government's stance on coronavirus. (AP)
If the government did require pubs, restaurants, movie theaters and other similar businesses to close, those who had bought business interruption cover would be able to submit insurance claims for lost business.
"Over the past few weeks the industry has suffered unprecedented drops in visits and many businesses are already on their knees," UKHospitality Chief Executive Kate Nicholls said. "This latest advice leaves the industry in limbo, with no recourse to insurance."
The sentiment was echoed by other trade bodies like the British Beer and Pub Association and the Night Time Industries Association, who called for urgent measures from the government to rescue the sector.
Prime Minister Boris Johnson late Monday warned people against non-essential social contact, telling the public they "should avoid pubs, clubs, theaters and other such social venues."
He stopped short of a ban on those venues opening, contrasting sharply with government-directed restaurant and other closures in France, Spain, Ireland and other European countries.
The Association for British Insurers said Tuesday that many businesses did not have the required cover in place. Standard-issue business interruption policies offer cover only if businesses are forced to close through physical damage.
Infectious disease cover is available as an optional add-on for some business interruption policies, but businesses can claim only where governments have forced the premises to close. The ABI said only a "small minority" of businesses will have taken that option.
"Irrespective of whether or not the government orders closure of a business, the vast majority of firms won't have purchased cover that will enable them to claim on their insurance to compensate for their business being closed by the coronavirus," a spokesperson said.
London Mayor Sadiq Khan said Tuesday morning the government needed either to outright ban hospitality venues from opening, or provide compensation directly to businesses affected.
"If the government said they're going to ban it, it means the businesses can claim from insurance," he told BBC television.
--Editing by Tom Mudd.
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