Business interruption insurance claims investigation - FAQ

What will Berrill & Watson and Gordon Legal do?

Berrill & Watson and Gordon Legal will provide you with a free and no-obligation initial assessment of whether you are able to make a claim against your insurer and if so, how you should do so. You can REGISTER HERE for an evaluation.

There are many common features across individual insurance policies and within policies. However, there are also some differences which need to be understood. Obtaining independent legal advice is critical to business owners understanding their entitlements.    

What obligations will I have if I engage Berrill & Watson?

We are offering to review your insurance policy and provide free preliminary advice. Once you receive that advice you can decide whether to proceed or not. There will be no obligation on you to proceed or to instruct us to act on your behalf.

What do I do now?

To receive free legal advice regarding your entitlements, you may:

1. Register your interest on the registration page;
2. Send a copy of your insurance policy and any correspondence from your insurer or broker to [email protected]

A member of our team will contact you shortly after receiving your registration.

What is business interruption insurance?

Business interruption insurance provides cover for business owners if their business is not able to operate normally, arising from factors outside your control.

There are different types of business interruption cover, some of which may cover losses related to the COVID-19 outbreak in Australia and/or the restrictions on trading imposed by the various State, Territory and Federal Government agencies arising from COVID-19.

Do I have business interruption insurance?

If you have an “industrial special risk” or “business insurance” policy, you are very likely to have business interruption cover included as part of those policies. If you are unsure whether your policy provides business interruption cover, contact us and we can check for you. You can call us on 03 9448 8048 or email us at [email protected].

What type of business interruption cover do I have?

There are generally two types of business interruption cover which are relevant to the COVID-19 outbreak. These are:

1. “infectious diseases” cover; and
2. “prevention of access” cover.

There may also be types of cover that are a combination of both.

“Infectious diseases” clauses cover interruption to business caused by the closure or evacuation of the business due to an outbreak of an infectious disease at or within a defined geographic radius of the business.

“Prevention of access” clauses cover interruption to business caused by an order of an authority or government body which prevents or hinders the use of or access to the business. The order must usually be made because of damage to property or persons at or within a defined geographic radius of the business.

My insurer told me I don’t have cover for COVID-19 losses. What do I do now?

Many business owners have had their business interruption insurance claims rejected by their insurers or have been told by their insurer that their policy doesn’t cover them.

We believe that many of these insurers have simply got that wrong and the information they have given business owners may be misleading and/or inaccurate.

It is crucial that you seek independent legal advice on your entitlements under your policy. Contact us and we can review your policy terms and how they may impact your claim for COVID-19 business interruption.

Can I dispute a rejected insurance claim?

Yes. There are a number of avenues open to you to dispute your insurer’s rejection of your claim. For more information, contact us and we can provide you with the guidance you need.

You can call us on 03 9448 8048 or email us at [email protected].

Are there any exclusions on my cover?

You may have an exclusion in your policy for diseases declared to be either:

1. a “quarantinable disease” under the Quarantine Act; or
2. a “listed human disease” under the Biosecurity Act; or
3. a combination of both of the above.

Some policies have no exclusion clause at all.

Contact us and we will check whether your policy has any exclusion clause and, if so, whether the exclusion would impact your claim.

What are the Quarantine Act and Biosecurity Act? Why are they relevant to business interruption policies?

The Quarantine Act 1908 was the legislation that governed Australia’s biosecurity powers. It allowed the federal government to declare certain diseases to be “quarantinable diseases” and take action in response to the biosecurity threat imposed by those diseases.

The Quarantine Act was repealed on 16 June 2016 and replaced by the Biosecurity Act 2015. The Biosecurity Act broadened the government’s biosecurity powers and allowed it to declare certain diseases to be “listed human diseases”.

The relevance of the two Acts to business interruption claims is that COVID-19 was declared to be a “listed human disease” under the Biosecurity Act, but was never declared to be a “quarantinable disease” under the Quarantine Act because the Quarantine Act was no longer in force when COVID-19 arrived in Australia.

Many business interruption policies had an exclusion for quarantinable diseases under the Quarantine Act, but insurers failed to update the policy wording when the Quarantine Act was repealed and replaced by the Biosecurity Act.

Those insurers that failed to do so may be liable to pay claims for COVID-19 losses as a result.

What do I need to prove?

For your claim to be successful, you may need to prove some or all of the following:

1. There has been an outbreak of COVID-19 at or within a certain geographic radius of your business;
2. There has been an order that closes or partially closes your business;
3. There has been a decline in your business income because of the outbreak or order(s).

The specific requirements of a claim will vary depending on your individual policy terms and on the type of business you have.

What happens if an insurance company refuses to pay a claim?

If your claim has been rejected by your insurer, you need to get independent legal advice about your right to challenge that decision. There are a number of different avenues available to you to pursue in order to challenge your insurer’s decision.

How long does a business insurance claim take?

We expect that insurers will seek to delay the claims process for as long as possible, or at least until the various legal challenges in relation to the validity of these policies and the relevant exclusion clauses have run their course.

This may take many months.

In the meantime, it is critical that you obtain advice to assist you in understanding your entitlements, whether and how to lodge a claim and what to do if your claim is rejected by your insurer.

How much can I claim and how do I calculate my losses?

Your policy schedule will set out the amount of cover you hold for business interruption. Your schedule may also have a sub-limit for the amount of loss you can claim under the infectious diseases or prevention of access clauses in your policy.

Generally, losses can be calculated by comparing your reduced business turnover since the COVID-19 outbreak with the turnover during the same period in the previous year. Although this may vary depending on your insurer.