The NSW Court Of Appeal recently heard a test case as to whether certain insurance policies should cover COVID-19 pandemic-related losses for business interruption claims.
The test case was run by the Insurance Council of Australia (ICA) and the Australian Financial Complaints Authority (AFCA) who launched the test case to resolve uncertainty about outdated wording in pandemic exclusions.
The court unanimously ruled 5-0 in favour of the insured defendants, finding the policy exclusions relying on the now repealed Quarantine Act 1908 and subsequent Biosecurity Act 2015 were not upheld.
The court’s decision could leave many insurers having to pay out pandemic-related business interruption claims.
It is worth noting at this juncture that this decision can be appealed by the insurers to the High Court, and the ruling is current today whilst the topic is still developing.
Whilst this is happening, the ICA has taken steps to obtain clarity on whether the coverage triggers in business interruption policies are satisfied in the circumstances of COVID-19.
It is also possible that insurers may rely on other exclusionary terms in policies as this decision related only to references to the Quarantine Act.
We will continue to keep ourselves abreast of the situation as it develops.
What Do You Need To Do If You Think You May Have A Claim?
- If you have already submitted a claim under your Business Interruption Policy, we will continue to monitor developments and work with your insurer on your claim.
- If you have not lodged a claim under your Business Interruption Policy we recommend that you contact us as soon as possible so that we can lodge the claim for you and aim to be ahead of any claim influxes.
- If you have any queries about your Business Interruption Policy we advise you contact your Regional Broker to review your specific policy.
- In order to proactively manage our Regional clients, we have identified a range of policies with exclusions referring to the Quarantine Act and will be contacting those clients to discuss the situation in more detail.
We will continue to keep you updated on this topic as more information becomes available and encourage you to reach out to your broker with any queries in the meantime.