Page 18 - The Insurance Times June 2020

Cover Story

IS 'COVID-19' -

AN INSURED

PERIL UNDER

IAR & LOP

POLICIES?

L ockdown, following 'COVID-19' Pandemic has PUBLIC ADVISORY dated 21.04.2020 clarified to the insuring

caused immense socio-economic impact in India.
public that the provisions of such policies does not provide
While everybody is affected by this, Business
cover against business interruption due to lockdown as also
Interruption is one of the most significant issue,
which has come-up in the context of Insurance cover under advised and cautioned them not to fall prey to the wrong
interpretations and advises to lodge claim under the policies
'Loss of Profit (LOP)' and 'Industrial All Risks (IAR)' policies. advised and offer to help by certain Advisors, Consultants
In this connection news, that was doing rounds in social and Legal Experts.
media about huge compensation received by Wimbledon
Organisation has generated great hope in the insuring As such, the question arises whether LOP and IAR policies
community to find financial succor under their LOP and IAR provide or not provide cover for current 'Business
Policies. Interruption' resulting in loss of Gross Profit and increased
cost of working due to loss of turnover. To understand this,
Also, the interpretation or rather misinterpretation of 'ALL following aspects are important:
RISK' Cover under Material Damage Section of the Y First of all, cover under LOP and IAR should not be
INDUSTRIAL ALL RISK Policy, which was made in some compared with the case of compensation received by
quarters has also added fuel to this burning issue. Wimbledon Organisation for the simple reason that
cancellation of event is covered under Special
However, 'GENERAL INSURANCE COUNCIL' in India in its' Contingency Policy and the insured had covered
Pandemic Peril specifically under the policy and paid
About the author additional premium for the same.

R C Thakker Y LOP and IAR policies undoubtably covers Business
A.I.I.I. Interruptions, but the current Business Interruption as
Chief Insurance Advisor a result of lockdown following 'COVID-19' Pandemic does
not fall within the purview of these two policies. The
18 The Insurance Times, June 2020