COVID-19 Business Interruption Test Case


You may have seen in the press recently the decision handed down in the NSW Court of Appeal in a test case run by the Insurance Council of Australia (ICA) and Australian Financial Complaints Authority (AFCA), with the court ruling in favour of the insureds.

It found that the quarantine disease cover restriction in business interruption policies that referred to the now repealed Quarantine Act, does not exclude cover for listed human diseases under the Biosecurity Act 2015.

Will there be an appeal?
It’s possible this decision may be appealed to the High Court of Australia (HCA); and a decision in this regard must be made by 16 December 2020. Also, 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. So further legal action might eventuate.

Determinations on claims will only be made once the legal process is finalised.

What do you need to do?
There have been a number of legal services offering to review decisions, however, may we respectfully suggest that before you move in this direction, we are able to advise on the cover placed and if the policy is triggered as part of our service. If there were to be any issues that require legal advice, we will discuss those with you so that you may consider your options at that time.

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.

Also, the decision only dealt with whether the insurer could rely on an exclusion which referred to the Quarantine Act. The court did not deal with whether any claim falls within the insuring clause.

We will provide another update as the insurer’s decision whether to Appeal to the HCA is decided.

As always, please don’t hesitate to get in contact with your Account manager on (02) 9587 3500 to discuss your specific situation.