Has your business been impacted by COVID-19? You may be able to make an insurance claim for business interruption after today.

Insurance companies could be forced to pay out thousands of dollars to business who were affected COVID-19.

Businesses, who purchased business interruption insurance were previously excluded from making COVID-19 related impact claims. However, today the NSW Court of Appeal rejected the insurance industry’s argument that policies did not cover COVID-19 losses.

The decision comes after some insurers repeatedly expressed confidence to their shareholders that pandemic exclusions would stand, despite the fact that many referred to an expired Act of Parliament.

The Insurance Council of Australia has now said it would examine its options to appeal the decision in the High Court of Australia.

The legal details

Some insurance policies had incorrectly referred to the Quarantine Act in some of its business interruption policies, which was repealed in 2015 and replaced with the Biosecurity Act.  IAG, Suncorp and QBE were among the insurers to make the error.

Insurance companies consistently refused to pay COVID-19-related business interruption claims on the basis that the policies explicitly exclude interruptions caused by “quarantinable diseases”.

The insurance industry as a whole claimed this was clearly an error, and the intention of the policy was obviously to exclude a pandemic under any future legislation.

The court held that the policy only protected insurers under the Quarantine Act, and the phrase “and subsequent amendments” referred to amendments to that act.

The court ruled the Biosecurity Act “did not provide for declarations of quarantinable diseases by the Governor-General”, instead referring to a “listed human disease”.

They said COVID-19 was never declared a quarantinable disease, and therefore was not excluded.

Check your policy

Businesses should review their insurance policies in light of today’s testcase ruling as they may now be able to claim its COVID-19 business related impacts.

Contact Business expert Matt Windle if you need assistance with reviewing your policy.