You will recall in our most recent Update on this issue, [November 2020] we reported to you that the NSW Court of Appeal had ruled in favour of Insured’s, meaning that ‘Exclusion Clauses’ in Policies that reference the (now repealed) ‘Quarantine Act 1908’, are invalid.
Bearing in mind that Policies that correctly reference the later ‘Biosecurity Act’, can still be relied upon by the Insurers to decline Covi19 related Business Interruption claims for loss of Income to their Business.
What are the Latest Developments?
Following that November 2020 ruling, the Insurance Council of Australia applied to the High Court of Australia to appeal the decision.
In the most recent development (June 2021), the High Court of Australia rejected that application and as a result, the original decision of the NSW Court of Appeal stands.
Therefore, Insurers cannot rely on ‘Exclusions’ in their Polices that reference the ‘Quarantine Act 1908’, to reject Covid19 related Business Interruption claims.
So What Happens Now?
We can report that the ICA has begun a second ‘test case’, this time in the Federal Court of Australia.
The purpose of this case is to gain clarity on a range of ‘other issues’ that will also have a bearing on the scope and ability of Insured to successfully lodge Covid19 related Business Interruption claims.
We are advised that this further test case will be heard later in 2021.
What Does This Mean for Your Potential Business Interruption Claim?
It is important to remember that the decision to invalidate reliance on Quarantine Act 1908 related Exclusions, does not automatically mean every Business affected by the Covid19 crisis, can claim the resultant loss of income under the Business Interruption section of their Insurance Policy.
Other ‘coverage triggers’ may also have a bearing on whether an Insurer can reduce or decline a potential Covid19 related Business Interruption claim. Each claim will be determined on the specific circumstances of the interruption, and the claim will still need to fall under the coverage as defined in the Insurer’s Policy.
Reminder: Contact Your Coastsure Insurance Broker To Discuss Your Individual Circumstances
As always, please feel free to contact your Coastsure Broker if you would like to explore any potential for lodging a Business Interruption claim under your Policy.
The upcoming test case in the Federal Court of Australia will help to further clarify the extent of coverage available to potential claimants.
We are keeping up to date with developments on this complex issue and will advise you of further important decisions as they occur, and again, please do not hesitate to contact your Coastsure Broker if we can assist you with any insurance related matters whatsoever.