Sell your cakes in street, insurer tells cafe over coronavirus claim

Insurer Hiscox has sent a letter to a cafe owner suggesting he should try to sell cakes to anyone passing his doorway instead of claiming on his insurance policy. 

Daniel Duckett – who is now campaigning for small firms to get payouts – was also told by Hiscox that criticism of the insurance industry by politicians was irrelevant. 

The cafe owner said he was taken aback when he received the seven-page dismissal of his claim two weeks after regulators at the Financial Conduct Authority had called on insurers to pay out claims or resolve disputes swiftly. 

It comes as Hiscox gears up for a legal battle with a group of business owners who bought cover for business interruption and have been told they will not get a payout. 

The FCA also said on Friday it was prepared to take the matter to court to help clarify whether insurers are on the hook for losses arising due to the coronavirus pandemic. 

Duckett accused Hiscox of ‘twisting’ its policy wording to try to get out of paying claims submitted by crisis-hit customers. He said his letter listed a menu of seven reasons for rejecting a coronavirus claim.

 In the letter to Duckett, seen by The Mail on Sunday, Hiscox said: 

• Any calls from politicians encouraging insurers to support small businesses are irrelevant; 
• The cafe owner could only claim on his policy if his premises had been at the epicentre of a viral outbreak rather than in an area hit by a pandemic that started elsewhere; 
• His claim will not be honoured because the Government’s restrictions haven’t totally shut down access to his business. The letter stated: ‘As we understand it, while [the cafe] served food on site, customers could also buy cakes from the shops, as bakeries that do not serve food on site have done and continue to do so. Our understanding is that food retailers of that kind are permitted to remain open’; 
• The claim would only be valid if his business is totally interrupted, not just that it is less profitable; 
• He cannot claim for the general economic damage from the virus; 
• He does not have protection if there are other reasons for his business failing. Hiscox argues his cafe is not only impacted by the shutdown, but also by social distancing rules and the demand for people to stay at home; 
• It ‘cannot sensibly be expected’ that an insurer pays out for a catastrophe on this scale. 

Duckett, owner of Lazy Claire Patisserie in Northern Ireland, is one of the founding members of the Hiscox Action Group, a group of around 300 firms who purchased cover from the insurer. 

He said: ‘I do feel like the insurers are ignoring the regulators. Hiscox shouldn’t have to respond with such a lengthy view if the policy is clear cut. They are twisting their wording to say this cover is not what we intended.’ 

Hiscox faces a separate legal action from a group of around 150 policyholders organised by the Night Time Industries Association. The group is expected to grow in size as it plans to attract new members referred by other trade bodies including UK Hospitality and the British Beer and Pub Association. 

The group has hired lawyers at Mishcon de Reya and Philip Kolvin QC to advise on legal options. 

Sources also said claims management companies were approaching the groups to ask if they might be able to help push forward cases. 

A spokesman for Hiscox said: ‘We are paying claims that are covered by the policies we issue fairly and quickly. We review every case individually and if any customer has concerns about the application of their policy, we encourage them to get in touch with us directly.’ 

An FCA spokesman said: ‘We have been clear that firms should pay valid claims as soon as possible and disputed claims resolved swiftly.’