Updated with High Court decision 14 October 2022
It is now 2½ years since COVID-19 hit businesses in February/March 2020. At the start, insurers and many brokers said that business interruption (BI) insurance did not cover COVID. However, after a number of court decisions, it is clear that business interruption insurance can cover COVID-19.
What is still not clear is how many policies will respond to COVID-19 losses, what the requirements are and how much can be claimed.
This blog gives an update on where the court and ombudsman cases are up to and when claims are likely to be paid.
High Court of Australia
In February 2021, the High Court gave the green light to business interruption insurance policies which included the old Quarantine Act exclusion (not the updated Biosecurity Act exclusion).
However, insurers brought another test case about other policy wording including:
- what is an outbreak;
- the link required between an outbreak, government orders and business losses;
- what is a shutdown;
- whether JobKeeper and government cash handouts should be deducted from losses; and
- whether prevention of access clauses override infectious disease clauses.
Business interruption insurance High Court decision 14 October 2022
On 14 October 2022, the High Court refused to grant special leave to the parties in the business interruption test case.
This means that there is now legal certainty about some aspects, but not all aspects, of business interruption claims. Some claims may now have stronger chances of success than others.
It’s important that businesses continue to make claims and, if your insurer rejects your claim, lodge a complaint with the Australian Financial Complaints Authority (AFCA).
Class actions
There are a number of COVID-19 business interruption insurance class actions on foot in the Federal Court – against QBE, Lloyds, Allianz and Hollard.
All have been on hold pending the outcome of the High Court test case, but will now likely proceed further
Individual court cases
There are also a few individual business interruption insurance cases before the Federal Court and state Supreme Courts.
They have also been on hold pending the High Court test case, but will now likely proceed further.
Australian Financial Complaints Authority
There are approximately 300 complaints before the ombudsman, the Australian Financial Complaints Authority (AFCA).
Berrill & Watson is representing over 30 of these complainants.
AFCA is accepting complaints and doing preliminary investigations, but they have also been waiting for the High Court outcome. AFCA complaints will soon proceed further now that the test case has concluded.
When will business interruption insurance claims be processed?
Most insurers have been either rejecting claims or trying to put claims on hold pending the High Court case.
Many businesses have been told they don’t have valid claims and don’t bother claiming.
This is wrong. You should definitely lodge a claim and consider an appeal if the claim is rejected.
Now that the High Court test case is finished claims/complaints can proceed, although working out the insured losses will be complicated.
How to lodge a business interruption insurance claim for COVID-19 losses
You will have to fill in a claim form (typically 4-6 pages long), plus provide at least basic financials setting out the losses.
It will be important to set out when and where COVID-19 outbreaks occurred and affected your business, including a comparison of the turnover/profit pre and post the outbreak – all within the wording in the policy.
You should get advice about your policy and help with a claim to maximise your chances. We can help you.
Check your policy
- The policies to check for cover are 2019/20 and 2020/21.
- You need to check the wording of your policy schedules and the Product Disclosure Statement (PDS).
- Berrill & Watson will check your cover and policy wording and tell you your rights for FREE.
- Contact John Berrill on 0408 322 979 or by email [email protected].
Or contact our Melbourne office for further advice and assistance.
Contacting Berrill & Watson
📞 Melbourne: 03 9448 8048
📞 Brisbane: 07 3013 4300
📞 Anywhere else in Australia: 03 9448 8048
More reading
You can read more about business interruption insurance and COVID-19 here, including information on:
- What insured events are covered;
- Determining what cover you have for COVID-19 losses;
- Cover for loss of income/profit/turnover;
- Cover for increased cost of working;
- Cover for claims preparation; and
- Types of COVID-19 business interruption insurance cover.