As a result of the disruption caused to many businesses due to the COVID-19 pandemic, test cases have inevitably emerged questioning pandemic coverage under business interruption policies.
The New South Wales Court of Appeal heard the first test case in November 2020. The Court principally considered whether the Coronavirus was a ‘quarantinable disease’ under the Quarantine Act 1908 (Quarantine Act), for which business interruption insurance claims could be made. It unanimously decided that it was not.
A second test case has more recently emerged in February resulting from interruption claims raised by nine small businesses with the Australian Financial Complaints Authority (AFCA) as a part of the Authority’s dispute resolution process. The impending court proceedings are expected to provide clarity as to the meaning of policy wording relating to disease, proximity of an outbreak to a business and prevention of access to premises due to a government mandate.
The stakes of these two test cases for employers may be high. According to the standing decision for the first test case, business interruption insurance excludes coverage for loss suffered because of the pandemic. However, an application for special leave to appeal this decision has been made to the High Court.
As we wait to know the outcome of these cases and for the vaccines to reach our workplaces, employers have a crucial but brief opportunity to revise their workplace policies to ensure they are prepared for any outcome.
If you would like your workplace policies reviewed, please do not hesitate to contact a member of Coleman Greig’s Team, who would be more than happy to assist you today.