If a Coronavirus outbreak happens in your restaurant, who foots the bill?

We were all overjoyed to see restaurants reopen last week, with guests eager to put their home-cooking pasts behind them. 

Cautionary measures to keep customers and hospitality workers safe have been implemented, but as we know, infections are still within the realms of possibility. What happens then? 

Government support

Localised lockdowns bring no financial guarantees from government as of yet; last week, Chancellor of the Exchequer Rishi Sunak was expected to announce new measures to support businesses in Leicester - which has been forced into localised lockdown as the city experienced a sharp rise in the number of cases out of whack with the rest of the country - but didn't.

Instead, he said nothing of the sort, but announced a nationwide VAT cut to support businesses nationwide. 

Nadhim Zahawi, Minister for Business and Industry said that no further financial aid would be provided in addition to what is already available - that is, business interruption loans, business support grants, business rate relief and the furlough scheme, which ends on October 31st - prompting fury from Leicester West's Labour MP Liz Kendall. 

“The Government is hanging the city out to dry," she told Leicestershire Live. 

“This is totally unacceptable.

“We have no idea when we are going to come out of this lockdown, but the Government has now confirmed there will be no extra financial help for our city.

"No extended support for employees on furlough, even if we are still in complete lockdown when the Government starts withdrawing the scheme."

Insurance payouts

On the weekend, journalist and industry pundit Mark Naylor Tweeted that a restaurant in Bristol reported a case of Covid and was forced to shut down, questioning who might bear the brunt of costs if this were to become a widespread occurrence. 

So a staff member of a Bristol restaurant has tested positive for Covid-19 and staff have to self isolate now as the place closes temporarily - what happens now in terms of payment for loss of earnings for the staff and restaurant? What help is there?

— Mark Taylor (@MarkTaylorFood) July 11, 2020

Most insurance firms are refusing to pay out on Business Interruption claims as the coronavirus is novel and thus not covered by their schemes. However, accounting, auditing and advisory firm KPMG issued a statement in which it detailed what insurance companies may be forced to pay out - stating that there is room for contention on the matter. 

It says: "Business interruption policies usually pay out only if physical damage occurs to an organization's assets or operations  - so coronavirus related claims may not be covered, but there is potential for future disputes on this issue."

Restaurants up and down the country - including celebrity Michelin-starred chef Raymond Blanc - are pursuing legal action against insurance companies in a bid to recoup some of the money lost as a result of the pandemic. 

What's more, London law firm Mishcon de Reya has begun a £40 million arbitration against Hiscox Insurance for failing to pay out on business interruption insurance claims on the basis that they contained exclusions for the risk of pandemic. 

Eight insurance firms including Hiscox are taking part in a UK court test case filed by the Financial Conduct Authority (FCA) - the purpose of which is to have the companies policies examined by a UK court, which will provide clarity for all parties involved and is hoped to settle the dispute.

Until then, companies remain in the dark as to what to do if their restaurant is forced to shut once more - prompting some to refuse to reopen in the first place.