If you’re waiting for the determination of a BI claim or a resolution of a dispute, learn more about why this might be taking longer than expected.
COVID-19 Business Interruption claims
Business interruption test cases
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The NSW Court of Appeal found insurers couldn’t rely on pandemic exclusions contained in BI coverage that reference the repealed Quarantine Act 1908 (Cth).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.
On 21 March 2022, three special leave applications to appeal the Full Court’s decision to the High Court were filed. The ICA does not anticipate that any decision on the special leave applications will be made for approximately three months from the date the applications were made. If the High Court decides it will hear the appeals, it may be another 12 months before a final decision is made.
We appreciate your patience while these matters are resolved. Clear guidance and agreement by the courts is essential in determining how we’ll interpret and apply the relevant policy wordings to BI claims.
We’re committed to supporting our customers through the claims process, and assessing claims as quickly as we can once the final judgement is received.
For up to date announcements and information regarding BI test cases, visit the Insurance Council of Australia website.
Lodging a Business Interruption claim
If you believe your circumstances entitle you to claim under your Business Interruption cover, you should consider lodging a claim. Learn more about making a claim or give our claims team a call on 13 10 13. If you have a broker, contact them for more information.
Each claim will be reviewed subject to your BI Insurance cover. Before a claim can be paid, you must be able to demonstrate a loss that’s covered by the policy. We’ll also need evidence of the value of the loss being claimed.
If the claim gives rise to one of the issues that has been appealed to the High Court in the second BI test case, we may be unable to finalise the claim until the final judgment is received.
If the loss doesn’t fall within the scope of cover, the claim won’t be paid.
Questions to consider when making a claim
A COVID-19 case or outbreak can disrupt your business in a range of ways. These can include:
- A confirmed case of COVID-19 at the insured premises that interferes, interrupts or requires the business to close
- A closure because of a known COVID-19 case within the vicinity limit (as detailed in the PDS e.g. 20km) of the premises
- A closure because of a confirmed COVID-19 outbreak in the vicinity of your business
In all these instances, we’ll need you to provide evidence. This can include:
- Health authority advice
- Emergency professional cleaning invoices
If the confirmed COVID-19 case wasn’t at your premises, you’ll need to be able to identify where it was in relation to your business. As it stands, the judgment in the second BI test cases (including the appeal to the Full Court of the Federal Court) means that a confirmed COVID-19 case within the vicinity limit may not trigger the insuring clause.
Your business may have had to change its trading hours. Or, you might have modified the business to allow you to trade under COVID-19. E.g. operating as a window-only or takeaway-only business.
Whatever changes were made, provide us with your previous 12 months sales data prior to the date of loss, as well as sales data during the loss period.
Financial information to prepare includes:
- Quarterly business activity statements
- Monthly/annual profit and loss statements
- Monthly payroll summary reports by employee
- Supporting invoices for increased/additional costs incurred to mitigate loss or maintain business operations
- Evidence of any government benefits your business has received, e.g. JobKeeper
- Details of all rental relief provided by your landlord
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Any advice here does not take into account your individual objectives, financial situation or needs. Terms, conditions, limits and exclusions apply.
Allianz Australia Insurance Limited ABN 15 000 122 850 AFS Licence No. 234708 is the insurer of any general insurance products offered on this website.
Allianz Australia Life Insurance Limited ABN 27 076 033 782 AFS Licence No. 296559 is the insurer of any life insurance products offered on this website.