In August 2020, the Insurance Council of Australia supported the commencement of a test case in the NSW Supreme Court to consider the application of Quarantine Act type exclusions in business interruption policies of the insurers HDI Global Specialty SE (HDI) and The Hollard Insurance Company Pty Ltd (Hollard) as they applied to COVID-19.
The NSW Court of Appeal has unanimously decided against the insurers, finding that these Quarantine type exclusions do not apply to COVID-19.
Insurers that have only denied a claim based on such an exclusion will now have to reconsider their prior position.
Adroit Insurance & Risk are contacting our clients affected by the decision to determine how they wish to proceed.
Based on our discussions with insurers, the sentiment that we are hearing is that the decision will most likely be appealed against by the insurers. It is also important to note that Insurers may still be able to rely on other provisions to deny a claim and this test case may not affect such rights. Insurers are already stating that whilst they respect the judgement of the NSW Court of Appeal and consideration of an appeal remains, they are not able to make a final determination on claims at this point.
These factors result in our advice that we cannot confirm if any claim for COVID-19 Business Interruption will be freely accepted by insurance companies. Insurance companies are entitled to and ultimately are the decider of whether a claim is accepted or not. Each claim will be assessed on its merits and the construction of the relevant policy.
Your Insurance Adviser will be able to assist you to lodge a claim, however, would do so with the mutual understanding that they cannot guarantee the outcome given the number of uncertainties that surround this event at this point in time.
Your insurance adviser will keep you updated with any further developments relating to this test case. If you would like to discuss any aspect of your insurance policy, please contact your specialist risk adviser.
Craig Love | Senior Risk Adviser, Adroit Insurance & Risk