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Nurseries are looking to take legal action against their insurer and broker after being told they do not qualify for business interruption cover during the pandemic.
More than 90 nurseries who are facing severe financial difficulties due to the coronavirus pandemic are considering taking legal action against their insurer and broker.
Law firm Fieldfisher is leading the potential claim against insurer Ecclesiastical for misadvising on business interruption cover and the broker Pound Gates for negligence in failing to advice after nursery claims for business interruption cover were rejected. Ecclesiastical says business interruption does not cover pandemics, but nurseries say they were misadvised and had assumed they would be covered.
The nurseries say they may be forced to close if they cannot get insurance payouts to cover their bills and pay staff.
Fieldfisher thinks more nurseries will join the claim and said it would be fought on no win, no fee. It says there has been a lot of negative press about some nurseries continuing to charge parents fees when they are furloughed or not working, but adds that many are struggling financially to stay afloat which could have a big impact on parents’ ability to return to work after the pandemic.
It says very few nurseries have been able to secure rent holidays on their premises while they have still had to pay staff until the furlough scheme kicked in at the end of April. A survey out today by the Early Years Alliance shows how recent changes to the government guidance on furlough have also had a big impact on nursery finances.
The Government says it has provided support to nurseries in the form of loans, continued payment of early years funding and the furlough scheme. However, guidance changes mean that any public money such as the early years funding is discounted from furlough pay. The Early Years Alliance is trying to get this overturned.
Local authorities have since been given the flexibility to move early years funding with children if their nursery has closed and they need to attend another.