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COVID-19 Claiming under insurance

Posted Thursday 16 April, 2020

By Justin Marschke & Ben Nearhos

Business interruption or industrial special risk insurance policies may contain extensions which cover loss of income arising from infectious diseases (by reference to the Biosecurity Act 2015 or the Quarantine Act 1908 in the case of older policies).  The present COVID-19 outbreak was declared a Listed Human Disease (“Human coronavirus with pandemic potential”)[1] and “infectious disease” under the Biosecurity Act 2015 (Cth).  However, many policies (including event cancellation policies) exclude such loss following previous outbreaks such as SARS.  Some insurance policies will cover loss of income arising from a government-imposed restriction.  However, insurance policies may otherwise not cover losses such as loss of income suffered in the recent COVID-19 outbreak, and related events.  It is important to review your policy to see if it covers only damage in the sense of physical damage to property from defined events which may not include either the pandemic itself or government- imposed restrictions.

[1] Biosecurity (Human Biosecurity Emergency) (Human Coronavirus with Pandemic Potential) Declaration 2020

Can I recover my business losses?

Whether you are able to recover your businesses’ losses, depends on your insurance policy.  The first step should be to read your policy wording, and determine the nature or cause of your losses to see if its covered (i.e. an “insured event”).  Your insurance policy will generally comprise of a policy schedule sent to you ahead of policy renewals (which is generally a shorter document and identifies the policy cover and limits), and a more detailed policy wording (which is a lengthier document and provides further details as to your insurance coverage and exclusions).  Bear in mind that your insurer or broker may not send to you your policy wording, and you might need to request a policy wording from them to properly interpret your policy.

Generally, insurance policies are of two types – claims made and notified, or claims which apply when certain circumstances arise (i.e. a “trigger”).  Some business interruption policies require a physical trigger, before a policy comes into operation, and covers you.  The virus of itself may not constitute circumstances in the sense of “trigger” causing loss, but other circumstances may.

Extensions and exclusions

That’s only the first step, you should then determine whether there is any specific extension to cover, or broad exclusion from, losses arising from these circumstances.

The present COVID-19 outbreak was declared a Listed Human Disease (“Human coronavirus with pandemic potential”)[2] and “infectious disease” under the Biosecurity Act 2015 (Cth).  So check your policy to see if it contains an extension to cover loss arising from infectious diseases.

If the losses suffered under your policy do not require a physical trigger, and are caused either by an “infectious disease” or a Government instituted public emergency shutdown, those losses could, in fact, be covered by your policy (provided they are not otherwise excluded).

Costs such as to decontaminate a workplace may be treated differently to economic loss and under different policies.

In any event, beware – check for any relevant exclusions.

You may face a fight with your insurer over what in fact caused the losses, and whether those losses are excluded under the policy – and given the pressure on insurers, there may be delays in claims handling.  Ultimately, you may be required to commence proceedings against your insurer for them to enforce their obligations to you under your policy.

[2] Biosecurity (Human Biosecurity Emergency) (Human Coronavirus with Pandemic Potential) Declaration 2020

What can I do now?

There are generally timeframes within which you need to make a claim under your policy, or notify your insurer.  Further, you generally need to maintain the insurance policy at least for the period within which a claim is made.  You also are likely required to take steps to “mitigate”, i.e. reduce your losses, wherever possible.  It’s a good idea to keep track of these steps, along with recording with as much detail as possible your financial losses, and how, when, and why they occurred.

Contact us if you would like some help

If you could use a hand, we are here to help.  We are prepared to continue to provide and maintain our consistently high level of professional service through the worst of this crisis.  Just contact one of our Principals as usual by landline, mobile or email.

Richard Cowen
Principal

+61 7 3210 3510

David Schwarz
Principal

+61 7 3210 3506

Justin Marschke
Principal

+61 7 3210 3542

Daniel Davey
Principal

+61 7 3210 3540

Note: This document contains only a general summary of the legal principles relevant to its subject matter and is not intended to be used or relied upon as legal advice. The application of the legal principles discussed may vary depending upon the particular circumstances. Tucker & Cowen Solicitors take no responsibility for any loss suffered as a result of a person relying on this paper.