Business interruption insurance is a category of insurance that indemnifies a business owner from interruption to the business resulting in loss of income from a disaster related issue usually fire, flood, building damage.
However, depending on the wording of the policy certain events can be excluded such as flood, earthquakes and, importantly in this case, the interpretation of pandemic exclusions.
Recently, the High Court refused an insurer’s leave to appeal. That refusal strengthens the legal proposition that insurers cannot exclude COVID-19 events in relation to various business interruption policies.
Of course, this outcome could vary subject to a particular policy’s exclusion wording.
Essentially, the insurer in this case was trying to argue that it could rely on the wording of the policy that COVID-19 was an excluded event relating to the repealed Quarantine Act 1908 (Cth).
However, the policy did not include reference to the newer act of Parliament dealing with COVID-19 the Biosecurity Act 2015 (Cth).
Therefore, simplistically, COVID-19, and any loss suffered from business interruptions caused by it, were not excluded.
There is, however, a second test case still making its way through the court system and insurers are waiting on the result of this test case before making any decisions.
The test case currently in the Federal Court will determine the meaning of policy wordings in relation to the definition of disease, proximity of an outbreak to a business, prevention of access to premises due to a government mandate, as well as policies that contain a hybrid of these types of wording.
It is important to note that each insurance policy is different, and advice should be taken if a dispute arises over the particular wording of a policy document.
At Hillhouse Legal Partners, we can assist you if you have or wish to seek advice as to whether you may have an insurance claim or an issue with an insurance company. Please feel free to contact us by email or phone at any time to discuss your particular circumstances.
The information in this blog is intended only to provide a general overview and has not been prepared with a view to any particular situation or set of circumstances. It is not intended to be comprehensive nor does it constitute legal advice. While we attempt to ensure the information is current and accurate we do not guarantee its currency and accuracy. You should seek legal or other professional advice before acting or relying on any of the information in this blog as it may not be appropriate for your individual circumstances.