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COVID-19: Frustrated hotel owners plead for insurance payouts

Many of these firms pay business interruption insurance to cover costs for when an event like a global pandemic hits, but now some insurers are not coming through.

An empty room at the Budmarsh Country Lodge. Picture: www.budmarsh.co.za

CAPE TOWN - Hotel owners are pleading with insurers for business interruption insurance payouts.

Many of these firms pay business interruption insurance to cover costs for when an event like a global pandemic hits, but now some insurers are not coming through.

In this case, the insurer typically steps in to pay some of the client's running costs.

Co-owner at Budmarsh Country Lodge in the Magaliesberg, Meg Farger, said that she was frustrated that Santam had not settled her insurance claim.

“I really don't know how we're going to cope because business interruption insurance is meant to be paid out quickly. For five weeks they gave us the run-around and then they reneged.”

Santam said that the policy wording stated that a business needed to be directly impacted by the notifiable disease to qualify for a payout, but in this case most policyholders, like Farger, were claiming based on the harms caused by the national lockdown.

The company said that if a policyholder ran a hotel and someone became infected with COVID-19, forcing them to close their operations, then they would have a claim for as long as it took them to clean their premises and return to operations. As a result, a number of claims were being processed.

Santam will meet two of its clients, who are challenging the insurer's decision to not pay out lockdown-related claims in court in September.

Insurance Claims Africa is assisting about 500 businesses after their claims were rejected by various insurers.

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