Has your business been disrupted because of the COVID-19 shutdowns causing financial loss? Many people assume this is something that wouldn’t be covered by insurance, but it may be time to take a closer look at your own insurance policy – you never know what you may find.
Step 1: Are you insured for business interruption?
Most businesses have some form of business insurance. Often combined into the one bundle, business insurance policies usually cover your business and premises against loss from theft, property damage or interruption to your trading.
Business interruption cover (sometimes called consequential loss cover) is insurance for continuity of your business’ income should your business be damaged or ‘interrupted’ by an insured event outside of your control and may be included in many business insurance policies.
Step 2: Check the wording of your insurance policy
Many insurance policies seek to exclude claims for pandemics, often by reference to “quarantinable disease[s] under the Quarantine Act 1908 (Cth)”. You may think that a highly contagious disease such as COVID-19 would fall within this exclusion.
However, the Quarantine Act 1908 (Cth) was repealed in its entirety in 2015 and replaced by the Biosecurity Act 2015 (Cth). This calls into question the validity of a policy exclusion which relies on the old Quarantine Act 1908 (Cth).
Read your own policy wording. Different insurance policies have different wording, so be careful not to make assumptions about what your policy might or might not cover and don’t rely on what someone else tells you about their insurance.
Step 3: If in doubt, make a claim!
There’s a saying that you miss 100% of the shots you don’t take – this especially applies to insurance claims.
If you have suffered financial loss and have business interruption cover, talk to your insurance broker or your insurer about making a claim. Don’t assume your loss won’t be covered or that an exclusion will apply.
Also note that if you make a claim and it is rejected, there are avenues available to challenge your insurer’s decision.
Watch this space!
The Insurance Council of Australia and the Australian Financial Complaints Authority have now agreed to file a test case for a Court to determine the validity of the “Quarantine Act” exclusion in light of the current COVID-19 pandemic. It is hoped that a decision in this matter will be handed down as soon as possible to give insured businesses more certainty regarding their ability to be covered under their business interruption policy.
Let us know if you need any help interpreting your policy wording, making a claim, or challenging an insurer’s decision to reject your claim.
Rod O'Sullivan, Partner (07) 3307 4568 rosullivan@shandtaylor.com.au
Emma Lewis, Law Graduate (07) 3307 4546 elewis@shandtaylor.com.au