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18 November 2020
The NSW Court of Appeal has ruled against insurers in the business interruption test case heard last month.
As insuranceNEWS.com.au has reported, the Insurance Council of Australia (ICA) and Australian Financial Complaints Authority (AFCA) agreed to launch the case to resolve uncertainty about outdated wording in pandemic exclusions.
Some Australian insurers’ policies still include exclusions referring to the repealed Quarantine Act 1908, which was replaced by the Biosecurity Act 2015. As a result, some claimants hope the exclusions will not apply to COVID-19 claims.
The test case consists of two separate small business claims that were lodged with AFCA as part of its dispute resolution process. The claims were with HDI Global Specialty and Hollard.
The insurers argued during the hearing on October 2 that the intention of the policies was clear, despite the reference to the repealed act.
But the court held that COVID-19 is not a disease “declared to be a quarantinable disease under the Quarantine Act 1908 and subsequent amendments”, and “accordingly was not excluded from the disease benefit clauses”.
“On the proper construction of the Tourist Parks & Lifestyle Villages Insurance Policy issued by the first plaintiff to the first, second, and third defendants for the cover period 28 February 2020 to 28 February 2021, COVID-19 is not a disease declared to be a quarantinable disease under the Quarantine Act 1908 and the exclusion in the HDI Disease Benefit is not enlivened,” the judgment says.
The same finding applied to the Hollard policy.
ICA told insuranceNEWS.com.au that it will consult with members on a potential appeal to the High Court.
“The ICA notes today’s judgment by the NSW Court of Appeal,” a spokesman said.
“The ICA, in consultation with its members and legal representatives, will urgently review the determination and specifically the grounds on which it could seek special leave to appeal against the decision to the High Court of Australia.”
The judgment can be read here.
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