Local businesses could be entitled to insurance compensation for losses they’ve suffered as a result of COVID-19 after a recent court judgement.
Local businesses could be entitled to insurance compensation for losses they’ve suffered as a result of COVID-19 after a recent court judgement.

Businesses could claim COVID-19 compensation they’ve missed

LOCAL businesses could be entitled to insurance compensation for losses they’ve suffered as a result of COVID-19 after a recent court judgement.

Earlier this month the New South Wales Court of Appeal ruled pandemic exclusions were not valid under business interruption insurance policies.

The court found pandemic exclusions that referenced the Quarantine Act, which was replaced by the Biosecurity Act five years ago, were not valid as it doesn’t cover COVID-19.

Insurance Council of Australia could still appeal the decision to the High Court of Australia.

Denes Lawyers principal lawyer Oszkar Denes, who is based at Springfield Lakes, said many business interruption policies contain a pandemic related exclusion clause.

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“It looks like several insurance companies, in the way in which they worded this exclusion, they said they’re not going to give you cover if your loss is caused by a disease which is declared to be a quarantinable disease under the Quarantine Act,” he said.

“So it was a very specific wording.”

But COVID-19 has never been declared to be a quarantinable disease under the Quarantine Act.

“Essentially what (the insurance companies) said is that the wording that referred to the Quarantine Act should be interpreted to encompass the Biosecurity Act … as COVID-19 was declared a human disease under the Biosecurity Act,” Mr Denes said.

“What the court found is that the insurance companies’ position should not be accepted because they were the ones who drafted the insurance policy.

“They chose the specific language of the policy.

“I think it’s likely they’re going to appeal it. Whether they’re going to succeed is another story because I think the judgement is very logical.”

Mr Denes said it was important for small business owners to read their insurance policies or contact their insurance broker to see if they can now make a claim.

“I’m aware that insurance companies have essentially held off on processing these claims pending this judgement,” he said.

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“They were concerned about the floodgates opening.”

He said this would not apply to newer policies which refer to the Biosecurity Act.

“My understanding is probably most of the major insurance companies have issued wording that is basically the old wording,” he said.

“Every business has to make their own inquiry with their insurance brokers.

“I think every business will have to prove what is the extent of their loss and was the loss caused by COVID-19.

“(Insurance companies) will look into it to see how you are justifying the loss and if there are any other circumstances that would have caused the same loss anyway.”

Read more stories by Lachlan McIvor here.