Coronavirus: Nurseries ordered to close hit out at insurance companies for not paying out

The news comes as nurseries received an email from the Department for Education confirming they have to close to limit the spread of coronavirus.

Lucy Whitehead, 42, who owns the Rainbow Corner Day Nursery in Southsea, said: ‘My biggest concern is insurance companies. My company initially said they would pay out but yesterday they did a U-turn and said this was no longer the case.

‘I will still need to pay my staff but will obviously not be receiving fees. I can keep going for around a month but if insurance companies are not going to pay out then many nurseries will not be able to survive this.’

Rob Allman, Business Operations Manager at Good Manors Day Nurseries, which has two nurseries in Fareham and one in Portsmouth, has said insurance companies are exploiting the fact ‘this is a new disease’ to get out of paying.

Rob said: ‘Our insurance company has said it won’t be paying out on our business break policy. They have said it’s not on their list of notifiable diseases. As this is a new dísease then it obviously won’t be. We have paid into a premium for 22 years and when we needed them to step up to the plate they have not.

‘My understanding from speaking to other providers is that their companies have said the same. I wouldn’t be surprised if nurseries ask parents to dip into their pockets to try and keep them going during this period as without this I feel many smaller nurseries will go bust.’

Like schools, many nurseries may be asked to remain open to provide childcare for key workers such as NHS staff who need to continue this vital service. However, nursery leaders have not yet received any guidelines as to how this will work.

Rob said: ‘We need to know exactly who key workers are and what happens if one parent is and one parent isn’t. We will obviously have to operate on a skeleton staff and so we need to know how many parents and children this will apply to.’

Lucy added: ‘I had already started to ask which parents work in professions such as the police or NHS as I’m sure this will be information the local authority will be asking for.’

Both Lucy and Rob believe the government need to either put a package in place to ensure nurseries can survive or put measures in place to force insurance companies to pay up.

Lucy said: ‘We have been serving the local community since 1983 but if we have to remain closed until September without this support then I would here have a very difficult decision to make. We need this support now - not in several weeks as this will be too late.’

Rob added: ‘We want to maintain a service for those children who are going to be continuing to come to us but we really need greater clarity and support with insurance payouts.’

The Association of British Insurers have confirmed that, if not in the contract, then the insurance companies are within their rights not to pay out.

A spokeswoman said ‘Contractually the company are within their rights as coronavirus is not on the list of notifiable diseases. Insurance companies cover against risk whereas coronavirus is now definitely happening and so would not be covered against any policy change.

‘Even if companies wanted to help they would be paying out on something they have not covered against and this would be going against their solvency agreement in which companies have to provide evidence they have sufficient funds to cover potential payouts.’