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Credit: Lukas Juhas

Thousands of businesses possibly entitled to COVID-19 related insurance payouts

Thousands of businesses may be entitled to insurance payments after the NSW Court of Appeal held that COVID-19 related losses are not excluded under certain insurance policies’ business interruption clauses.

The NSW Court of Appeal’s decision on Wednesday involved insurer HDI and one of its businesses, however the findings have widespread implications for other insurers who have similarly worded exclusions.

Many insurers have refused to pay COVID-19 related business interruption claims on the basis that their policies excluded interruptions caused by “quarantinable diseases” under the Quarantine Act 1908.

However on Wednesday, the Court held that COVID-19 was not a “quarantinable disease” under the Quarantine Act and therefore COVID-19 claims were not excluded.

Moreover the Quarantine Act had been replaced with the Biosecurity Act 2015 and so insurers such as Suncorp, IAG and QBE had been relying on repealed legislation.

Under the Biosecurity Act, COVID-19 is a “listed human disease.”

Insurers therefore argued that in construing their policies, any excluded “quarantinable disease” under the Quarantine Act included “subsequent amendments” such as “listed human diseases” under the Biosecurity Act.

However the Court held that “subsequent amendments” in the Quarantine Act did not extend to “listed human diseases” under the Biosecurity Act, and so COVID-19 would still be covered under business interruption claims.

The Insurance Council of Australia is considering seeking special leave to appeal this decision.

“The ICA, in consultation with its members and legal representatives, will urgently review the determination and specifically the grounds on which it could seek special leave to appeal against the decision to the High Court of Australia,” said the ICA in a statement.

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Ann Wen

Ann Wen

Ann is a journalist at Dynamic Business.

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