There’s a great deal of confusion right now about Business Interruption cover, and whether small businesses impacted by the coronavirus pandemic and associated government-imposed shutdowns have valid claims.
Many businesses have seen revenues devastated over recent months as they have been prevented from trading to help keep on top of COVID-19 transmission, and those with insurance policies in place may have hoped to be able to recover some of their losses.
It’s not our role to tell you whether a claim will be paid or not – that is something that only your insurer can adjudicate on. However, we are here to put your case to your insurer in the strongest possible way.
We can help explain some of the intricacies, go through the “wordings” of your specific policy – they are not all the same by any means, especially when it comes to defining exclusions for pandemics – and assist you in outlining the circumstances of your loss should you wish to make a claim.
We can also help you understand your insurer’s decision, the reasons behind it, and your options for challenging it if your claim is declined. However, the harsh reality is that the bulk of Business Interruption cover is unlikely to respond to a claim.
Reinsurers began withdrawing their cover of insurers due to the scale of the global risk following assessments after the SARS and MERS outbreaks some 15 years ago, and insurers followed suit by excluding the risk because the scale of a pandemic and the likely cost could not be defined. As we have seen since, the cost has been massive.
Insurance policies generally respond to physical damage at an insured’s premises, and even when an infectious diseases extension is in place, this is not usually designed to cover pandemics – and most policies will exclude it as a risk.
The diseases cover is intended to cover localised outbreaks of diseases such as Legionnaires’ or salmonella. But this does not mean that it is impossible to have a valid claim as a result of COVID-19.
Every circumstance and every policy is different, and some policies contain outdated exclusions referring to the now repealed Quarantine Act, which was replaced by the Biosecurity Act in 2015.
While insurers argue that the intent of the exclusion is still clear, some law firms believe that the wording could invalidate exclusions. The Australian Financial Complaints Authority is considering whether to proceed with a test case that could provide guidance, and in other countries such as the US and UK, debate is raging over similar issues.
There’s no doubt that it’s a complex matter, and it could be some time before it is fully resolved.
But we can help. Our expertise and experience in times like this are just some of the reasons that you use a risk adviser.