COVID-19 claims under business interruption insurance – NSW Court of Appeal gives go-ahead in test case

Making your claim for COVID-19 losses under business interruption policies

This was a unanimous judgment from the New South Wales Court of Appeal constituted by five judges, including the Chief Justice of the Supreme Court and the President of the Court of Appeal. Insureds whose claims (generally, under policies of business interruption insurance) have been denied or held-up pending the judgment now have the robust judgment of an experienced appellate court on the QA exclusion to support a request for their insurer to finalise the assessment of their claims. If an insured is entitled to be paid a claim, where appropriate they may also be entitled to interest under section 57 of the Insurance Contracts Act 1984 (Cth).

Insureds who have held off making claims because of the QA exclusion should reconsider that position and whether the perceived impediment to making the claim has now been removed.

A number of insurers have previously described the QA exclusion as a "pandemic exclusion". Given the decision of the Court, this is clearly not correct. To use Justice Hammerschlag's words, while it may have made "better commercial sense… to have chosen words to allow for the exclusion of serious diseases which break out during the cover period", that is not the wording which was chosen. Insurers and insurance brokers whose customers have insurance policies that contain the QA exclusion should now write to every insured with that exclusion and clarify that the exclusion does not apply to loss caused by business interruption due to COVID-19 and invite their customers to submit a claim if they have suffered such loss.