HIB: Coronavirus & Insurance

Information found in this post is courtesy of our sponsors HIB Insurance Brokers. 

While Australia has been relatively protected from the spread of Covid-19, many businesses have been disrupted due to travel, import and or export restrictions. We have seen this particularly in the last few weeks with the closure of the Victorian/New South Wales border and more broadly on a global level as countries continue to battle through a second-wave of cases. 

So what does this mean for your business if you have business interruption insurance? 

Unfortunately, not much. 

As HIB's Nicholas Barr explained, "for an insurer to pay a business interruption claim, there usually must be a material damage claim (fire, storm etc) at the location first in order for the policy to adequately respond. There is very little business interruption cover built into the policy wordings for claims where there is no material damage component, and in the event that there is, it must originate from the closure of the business by a public authority or from an infectious disease."

Where there is wording built into the policy to cover infectious disease, it usually only extends to cover things such as an outbreak of Legionnaires disease, or measles.

In Australia, insurers will generally exclude any infectious disease cover if the disease is declared quarantinable under the relevant Act of Parliament (i.e. the Biosecurity Act of 2015). Many of the insurance policies in force still reference the previous act (the Quarantine Act of 1908) which was repealed by the Biosecurity Act.

There is currently a test case going before AFCA (Australian Financial Complaints Authority) to determine whether the insurer(s) can rely on the old act in their policy wording in order to deny paying the claim. Legal opinion is split between whether the case will be successful or not.

In saying this, Insurers and related service providers have been very helpful in accommodating clients where they can in this time of uncertainty.   

During this ever-changing situation, we have seen some excellent examples, being from flexible underwriting through to accelerated claims settlements.  

In the meantime, if you have any questions about your business insurance, make sure you contact Nicholas and the team at HIB. 

P: 02 6041 1488

M: 04164 58590