18 Jan 2021

Businesses have been advised that pandemics or contagious diseases are not covered under the normal business interruption cover but can be included. 

Speaking in an interview with BOPA, Insurance Institute of Botswana vice president, Mr Pako Morapedi defined the business interruption cover as interruption or interference with the business as a result of damage occurring during the period of insurance.

Mr Morapedi cited fire and any other material damage/physical loss by the business.

However, he said extensions on the initial policy were possible but would attract additional premiums.

Specifically about COVID-19, he said, extensions were allowed for contagious or infectious diseases at the business premises including acts to restrict access to the area in terms of local, regional, or national law or regulation of public health and safety which might affect the company.

Mr Morapedi also said contagious or infectious diseases within a 25km radius of the premises and acts to restrict access to the area in terms of any local, regional or national law or bylaw or regulation about public health and safety within the same distance could be considered as an extension.

However, Mr Morapedi pointed out that there were certain exclusions citing liability arising from any pollution hazard in the country whether ingested, inhaled or through seepage.

Also excluded were earthquakes (whether arising from mining operation or otherwise) as well as fines, penalties, punitive exemplary or vindictive damages and liabilities assumed by agreement, he said.

Explaining that this was standard industry practice, Mr Morapedi said each insurance company had the right to adjust policies according to risk appetites as well as reinsurance arrangements.

He encouraged businesses to familiarise themselves with conditions for the issuance of a business interruption cover and considerations they might add. Ends