Since mid-2021, the Insurance Council of Australia (ICA) has been conducting a series of court ‘test cases’ to clarify the circumstances that would trigger a claim to be paid under BI cover due to COVID-19. For some of our customers, this has meant there’s been a delay in reviewing and determining claims. We understand this may cause concern, so we’ll try to keep you informed of the ongoing situation.
The first BI test case took place in June 2021. The NSW Court of Appeal found insurers couldn’t rely on pandemic exclusions contained in BI coverage that reference the repealed Quarantine Act 1908 (Cth).
The second BI test case sought to obtain clarity on a number of policy issues such as:
- How the definitions of infectious disease are to be interpreted in policy wordings
- What constitutes a COVID-19 outbreak
- How the proximity requirement is to be interpreted
- The impact of government orders and other mandates
- Other policy wording matters
On 21 February 2022, the Full Court of the Federal Court substantially upheld the conclusions reached by the Federal Court in the second BI test case. Unless this finding is overturned in the High Court (see next steps below), this means that in the factual circumstances set out in test cases, the relevant insuring clauses won’t be triggered. This means there may be no cover under the policy for these types of claims.