Insurers are turning down the claims of many hospitality businesses while others wait in limbo, left to rely on government-backed relief.
Kate Nicholls, chief executive of UKHospitality, told The Caterer: "We have heard increasing reports of insurers not paying out on policies, largely due to Covid-19 not having been a stated part of policy coverage.
"It raises the question: if there is no flexibility around extraordinary, unforeseeable events, what is the incentive for businesses to pay insurance companies rather than self-insuring and having absolute confidence of a pay out?"
Tim Foster, founder of Yummy Pub Co, said his insurance policy covers business interruption and notifiable diseases, but his claim was turned down within two hours of submission on the grounds that Covid-19 was not listed within the document.
He told The Caterer: "We have it in our policy and the government made the change [to declare Covid-19 a notifiable disease], but unless it is specifically written in the policy they're refusing cover. They will only consider an application if we can prove Covid-19 was contracted in one of our premises, resulting in us having to close the venue.
"There's not one person I've spoken to that's been able to claim any sort of insurance."
Jack Stein, chef-director of the family business established by his parents Rick and Jill – the flagship of which is the Seafood Restaurant in Padstow, is hopeful that the business' policy will cover the lockdown, but stressed the need for insurers not to drag their heels.
He said: "We took out non-named contagious disease cover several years ago. We're still waiting for them to accept the claim, but we've taken legal advice and it's clear we have an extremely strong case. We don't think it will come to that; we think they will settle, but they have not yet.
"The legal advice was important because if they take too long we will still go bust – we need to push the claim home. We can't sit here for months arguing the toss about whether coronavirus was in the building. It's extremely important for us to pay our staff and our suppliers."
Last week trade bodies, including UKHospitality, the British Beer and Pub Association, the British Institute of Innkeeping and the Campaign for Real Ale, wrote to chancellor Rishi Sunak calling for the distribution of grants to be accelerated and extended.
Nicholls said: "The package of support that the government has announced is very generous. Unfortunately, the delivery of that support has been far too slow, and businesses cannot wait any longer.
"The £51,000 [rateable value] threshold [for grants] must also be scrapped as too many businesses fall outside of the limit. These businesses may be in more expensive buildings, but they are being hit just as hard as others. There is also the danger that jobs will be lost in much larger numbers if these bigger employers fail. That is why they need support, too."
Foster said three of his four pubs have rateable values above £51,000 as a result of their commercial success, which now threatens to make the businesses' futures untenable.
He explained: "If the grants aren't extended, my only other option if this drags out, which it appears it will, is to take out a government-backed loan and borrow money, which we've never done in the 12 years of our business. It will put us in the position of making a decision of whether or not we put ourselves into administration.
"We simply will not borrow money we have to pay back for the next five years because with all the pressures the tax system puts on us, we don't make the margins to pay these loans back. We need bold decisions [from the chancellor] this week."