Vagabond Wines denied ‘valid’ insurance claim for covid losses

Despite having pandemic business interruption insurance, Stephen Finch, who is founder of UK wine shop and bar chain Vagabond, told db yesterday that his insurer “has decided to deny all claims” relating to coronavirus losses.

Stephen Finch is founder and managing director at Vagabond – a business he began 10 years ago and now comprises eight hybrid wine bars and shops

London-based Vagabond – which comprises eight hybrid wine bars/stores – has taken “close to zero revenue” since 20 March, when UK prime minister Boris Johnson ordered bars and restaurants to shut as part of the Covid-19 fight.

Although the cost to the business will surpass the pay-out Vagabond was due to receive should there be a pandemic, Finch told db that he was covered up to the sum of £1.366 million, and had been assured that he was protected by Eaton Gate, which calls itself ‘a virtual insurer’ (his policy was also underwritten by Royal Sun Alliance).

While describing the relationship between Eaton Gate and Royal Sun Alliance, “as not terribly clear”, he told db that “Eaton Gate were the ones who only a month ago said policy holders would be covered if the coronavirus got listed as a Notifiable Disease by PHE [Public Health England], which it subsequently was, so I’m holding them to it.”

By “holding them to it”, Finch means that he has instructed lawyers to pursue the matter – that is, the £1.36m business interruption indemnity sum he believes he is rightfully owed.

A further explanation regarding the validity of Vagabond’s claim was included in a statement disseminated by Michael Kill, CEO at the NTIA (Night Time Industries Association), on Wednesday this week, in which it was noted that night time economy businesses are being denied valid insurance claims.

Kill commented, “While we appreciate there are some clear cases where insurance claims within the night time business sector are not legitimate, there are a considerable number of businesses who are being denied valid insurance claims, being disputed by certain insurers in the hope that the current financial situation will deter them from challenging the claim.”

“These actions have not gone without notice and will be challenged at a greater scale in the coming weeks,” he added.

In the missive, where Vagabond was held up as an example case, Finch commented, “Vagabond is one of the very few businesses to actually have had pandemic business interruption insurance, and one of the most rigorous policies in that regard.”

Continuing he noted, “Our policy essentially stated that in the event we experience business interruption stemming from an occurrence of a notifiable disease (as determined by Public Health England, which added COVID-19 a month ago) within a 25-mile radius of a premises of ours, we would be eligible for our BI [business interruption] indemnity sum. As you can imagine, this is a significant sum (£1.3m).

He added, “The policy wording is clear cut. The facts are indisputable. And yet yesterday I heard from our brokers that the insurer, Eaton Gate, has decided to deny all claims.”

Speaking to db yesterday, Finch explained that having seen the impact of both SARS and MERS on businesses “not that long ago” he had decided to add the pandemic business interruption cover to his policy, although he noted that lost gross profits due to the pandemic will have amounted to more than £1.366m.

Concluding on the topic he said, “If the insurance is not there for the reasons you get insurance, then what’s the point in getting it?”

Since speaking to Finch, db contacted Eaton Gate for comment, and received the below this morning from head of claims at the company, Iain Taylor, who wrote, “Please note that we are neither an insurer nor a producing broker but act as an intermediary between brokers and our insurer clients. Vagabond Wine’s insurer has provided authority for the coverage decision in this matter.”

He then noted, “In common with the rest of the insurance market, we have noted that insurers do not believe their policies respond to COVID-19 related losses. Whilst we are not at liberty to disclose private and confidential information about individual policyholders, we can confirm that our Commercial Combined policy has a specific exclusion relating to losses arising from epidemic and disease.”

He added, ‘We believe the coverage decision is in line with statements released by the Financial Conduct Authority (FCA) who have recognised that most BI policies will not respond to COVID-19 losses and particularly those with clear exclusions.”

Finally, he noted, “We recognise that this unprecedented event has caused difficulties for many businesses which has led to government assistance being offered and hope that your readers will be able to obtain some relief from this source.”

Prior to this statement, Finch had said that his lawyers had identified “a very cryptic get-out-of-jail clause tucked into the last page [of his policy] about general exclusions.” However, he also said that “It is not a clear cut get-out-of-jail-free… our lawyers think that it is largely BS [bull shit].”