Since the onset of the COVID-19 pandemic in Nigeria, business organisations have been considering how best to respond to its impact. Where contractual obligations have become impossible, businesses have looked to force majeure and (where applicable) frustration in order to suspend performance or terminate the contract in its entirety.
However, for many businesses, the impact of COVID-19 goes beyond contract performance. Businesses, particularly those in the hospitality sector such as hotels, shopping malls, airlines, restaurants and event centres, may face a real existential threat as a direct result of COVID-19. The precipitous fall in business and revenues coupled with existing challenges in the operating environment with high interest rates and growing inflation has made a bad situation worse.
It is therefore a time for savvy CFOs and risk managers to look to their insurance policies for relief. “Business Interruption Insurance” sounds like just the right thing for this situation – after all, business has been materially interrupted in Nigeria and around the globe. But, will the typical policy cover financial loss caused by COVID-19?