Coronavirus is to be declared a notifiable disease after businesses voiced concerns that losses would not be covered by insurance policies.
Hospitality businesses were among those to have spoken out as they faced having insurance claims related to the spread of coronavirus denied.
But a Department of Health and Social Care spokesperson, has said: "To mitigate the impact on businesses, we will register COVID19 as a notifiable disease.
"This will help companies seek compensation through their insurance policies in the event of any cancellations they may have to make as a result of the spread of the virus."
However, despite the announcement David Noble, director of hospitality and leisure at James Hallam Insurance Brokers warned businesses' not to overestimate the move.
He said: "There seems to be a misunderstanding in the hospitality sector regarding what business interruption insurance will cover in relation to the coronavirus.
"It will not cover cancelled rooms or corporate bookings due to a disinclination to travel or attend. If the specified disease extension on a business interruption policy extends to include coronavirus, which is rare at the moment amongst insurer wordings, then loss of revenue arising from an outbreak on the premises would be covered."
The news has been welcomed by UKHospitality. Chief executive Kate Nicholls said: "This is a helpful step forward by the government and should help offset some of the losses that hospitality businesses will incur due to the coronavirus. Tourism and hospitality is likely to be hit as people cancel holidays and our members are already reporting a reduction in hotel bookings.
"Businesses will need to check the terms and conditions of their insurance and make sure their insurance provider has updated their policy to include Covid-19. This is not going to be a remedy for all businesses, but it should help some of those who are already feeling the strain."
Yesterday (3 March) the number of confirmed coronavirus cases stood at 51. Health secretary Matt Hancock has said widespread transmission of the virus is becoming "more likely". The prevention of large gatherings has been outlined as a potential measure to delay the spread of coronavirus although it has yet to be enacted.
The cancellation of major corporate events and a reduction in business travel is already taking its toll on the industry with the Global Business Travel Association (GBTA) estimating it will cost hospitality $47b (£37b) a month.
A poll of more than 400 GBTA member companies last week found two-thirds (65%) of respondents reported cancelling meetings and almost one in five (18%) had cancelled "many".
Joss Croft, chief executive of UKinbound, said: "Clearly this is a very worrying time for the UK tourism industry and travel and tourism worldwide. This week we will be gathering specific information and intelligence on the impact of the virus on our members' businesses to date and what help and support they need now and going forward.
"We have been relaying advice and guidance from VisitBritain to our members on a daily basis and also liaising with colleagues in the Department for Digital, Culture, Media and Sport (DCMS) about the impact on the industry. We have urged our members to be as lenient as possible with each other with regards to their cancellation policies, as we know that when the impact of the virus improves, there will be a huge pent up demand for travel to the UK."
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