As we are all aware, the pandemic has had a massive effect on companies and businesses across the country.
If you have insurance in place to cover interruptions to your company’s commercial operations, e.g. an Industrial Special Risks policy or similar, you may have insurance cover that may respond to get you paid a percentage of your lost gross profit, which may help your business significantly.
As you might expect, the legal merit of any claim will depend on the wording of the particular insurance policy a business has taken out. One key point for your business will be whether your insurer has updated its policy wording regarding COVID-19 exemptions to refer to the Biosecurity Act 2015, or whether the policy issued to your business for the period covering the pandemic still refers to the Quarantine Act 1908. Why is this important? Because the Quarantine Act 1908 was repealed with the introduction of the Biosecurity Act 2015, which means that COVID-19 is not, and can never be in 2020 a "quarantinable disease" under the Quarantine Act 1908. In contrast, the Biosecurity Act 2015 refers to "listed human disease" and COVID-19 has been added as a "listed human disease" under that Act.
Insurers are arguing that any reference in policies to "quarantinable disease" under the Quarantine Act 1908 should be read as meaning the same as a "listed human disease" under the Biosecurity Act 2015, such that any claim for business interruption for COVID-19- based reasons should be disallowed.
We disagree with this approach to interpretation. It goes against what we see to be the long-established approach of the courts here in Australia to construe any exemption strictly and in favour of the insured. We are of the view that this approach will not be supported as we say that a repealed Act can no longer be relied upon by an insurer to assist it to reject a claim.
Please contact us if you need advice on whether your company’s policy will respond to losses flowing from COVID-19. Unlike other large commercial firms, we are not on any insurance legal panels and so we regularly litigate against insurance companies.
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.