Australia:Businesses called upon to check for COVID-19 insurance payout

Businesses that were hit hard by the COVID-19 pandemic in the Australian state of New South Wales (NSW) have been urged to check their insurance policies as they may be eligible to claim a payout from their insurer, reported Yahoo Finance Australia.

According to law firm Slater and Gordon senior associate James Hunter, businesses that had customer-facing services could potentially be eligible for a business interruption insurance pay-out.

“Restaurants, bars, gyms, dance studios and businesses offering public-facing services who lost money as a result of COVID-19 may be able to go ahead with a business interruption insurance claim,” said Mr Hunter. The call to check insurance policies comes after a recent court ruling that could see some businesses newly eligible for a pay-out.

Last month, the NSW Court of Appeal handed down its decision on the business interruption (BI) insurance test case that was initiated by the Insurance Council of Australia (ICA) and Australian Financial Complaints Authority. The test case was launched to resolve the uncertainty surrounding potentially outdated wording in pandemic exclusions. Several insurers in Australia have denied coronavirus-related BI claims because their policies specifically excluded disruption caused by ‘quarantinable diseases’. However, these policies referred to the Quarantine Act, which was repealed in 2015 and replaced with the Biosecurity Act.

Despite the insurers arguing that the intent of the clauses was clearly to exclude a pandemic even after amendments in the Biosecurity Act, the NSW court said that COVID-19 is not “declared to be a quarantinable disease under the Quarantine Act 1908 and subsequent amendments”, and “accordingly was not excluded from the disease benefit clauses”.

The ICA had that the insurance industry is sympathetic to businesses which have experienced hardship as a result of COVID-19 restrictions. However, the sector holds the view that pandemics were not contemplated for coverage under most BI policies and that the Quarantine Act exclusion excludes COVID-19 related claims.

Source: Asia Insurance Review