A director who specifically took out cover to guard against losses in the event of a pandemic has spoken of his sleepless nights as his insurers refused to pay any of the £765,000 the business has lost.
Andrew Barnes, the director Bure Valley Railway, worked for the Royal Bank of Canada in 2003 when the SARS disease destroyed thousands of Vancouver businesses.
To avoid the same fate he added a clause to his insurance policy prior to the pandemic which would cover costs in the event of a disease outbreak that caused the business to close.
But despite this, and a high court ruling this week that insurers had to make payments to SMEs under business interruption policies, Mr Barnes believes he will only get a fraction of what he is owed.
"The high court ruling on Friday will put legal pressure on insurers, but they will do whatever they can to bring down their payouts as much as possible - whether it's trying to offset furlough payments or finding other loopholes.
"For example the first time my claim was rejected they said the business couldn't link our closure to a case at the NNUH, despite the fact we were in a government-ordered lockdown," Mr Barnes said.
The frustration of paying £38,000 a year for policies which won't pay out has reduced the directors of the company "to tears".
"The irony is that in July we had to renew our insurance - before going into another two lockdowns. We've been cutting costs and putting people on furlough, directors haven't taken salaries.
"We haven't had to lose any staff - and they have been superb throughout this - but we wouldn't be here if it wasn't for the boom in online sales of our model railways which have increased by about 50pc.
"By the time appeals go through and payments actually start to be made it will be April I would predict - around a year since businesses were first told to close.
"Our initial policy covered us up to £500,000 and we have lost more than that - but I don't think we'll get close to that much."
Ask the Expert: What does this mean for businesses?
Philip Lumb, partner and litigation solicitor at Norwich's Clapham & Collinge, said: "Any business with a business interruption clause in its insurance policy is entitled to claim for loss of income suffered as a result of the coronavirus pandemic.
"Typically these will be smaller businesses forced to cease trading or close due to the various lockdowns.
"Claims will take account of lost income, but also any money received by the business during the pandemic, including under central and local government business support schemes and grants.
"Other factors affecting the amount businesses are entitled to claim include the dates of policies (businesses with policies terminating in May 2020 will clearly receive less than those with policies terminating in February 2021, particularly as insurers tended to change the wording to exclude claims due to the pandemic in any policies incepted after the first lockdown), policy excesses and any other relevant exclusions.
"Businesses should check their policy wording, particularly the policy schedules, and raise any queries with their broker."
How do businesses make a claim?
Mr Lumb said: "Businesses should ideally by now have notified their insurer of their intention to claim, either direct or through their insurance broker, who will be able to assist in making any claim for business interruption.
"The policy wording, usually set out in detail in the policy schedule, will typically set out how a business should make a claim, in terms of the timing, the precise method of any notification and any additional evidence and information required to support the claim.
"Businesses are under a duty to disclose any documents or other information requested by an insurer.
"The Financial Conduct Authority’s commitment to work with insurers to pay claims to businesses quickly should mean that any delays in payments are kept to a minimum, but it will take some time for insurers to quantify the significant number of claims, previously estimated at about 370,000, and totalling over £1bn."
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