A caravan park on the outskirts of Tamworth that was closed to tourists due to a covid outbreak has won a dispute over business interruption cover.

The business held a Tourist Parks and Lifestyle Villages policy with HDI Global Specialty and made a complaint under the Murder Suicide or Disease additional benefits section for losses during the year starting March 23 2020.

The “disease clause” wording says circumstances deemed to be “damage to property” include “the outbreak of a notifiable human infectious or contagious diseases occurring within a 20-kilometre radius of the location”.

The complainant says it shut the business on March 26 2020 in compliance with a public health order that required the closure of certain public venues and entertainment facilities, including, specifically, caravan parks.

The Australian Financial Complaints Authority (AFCA) says under the wording the business had to show there was an “outbreak” within the specified radius “because it would have been required to close the park upon that date because of the health order regardless of any outbreak”.

The caravan park and the insurer were in dispute about whether a relevant covid “outbreak” had happened within 20 kilometres of the business.

The Federal Court in the industry business interruption test cases determined that the discovery of a person in the community with an infectious disease such as covid satisfies the definition of an outbreak.

The complainant pointed to a passenger on the Ruby Princess cruise ship who returned to his home 14km from the insured premises on March 19 and who was diagnosed with covid on March 23.

The person had walked in and out of a clinic “through an uncontrolled public environment” after becoming symptomatic, it argued, and it says there were likely 11 covid cases in the Tamworth area within a seven day period from March 22.

The insurer argued that there was no evidence the Ruby Princess passenger was infectious in the community, his admission to hospital didn’t constitute an outbreak, and NSW Health data on other people doesn’t support the complainant’s case.

The insurer also submitted that Tamworth’s post code has a radius larger than 20 kilometres from the insured premises, so people with covid within the post code area may not have ventured into the required zone.

“Whilst this is an accurate submission, I am satisfied it does not displace the weight of evidence provided by the complainant,” the AFCA adjudicator says.

AFCA says it’s “satisfied, on balance” that the complainant has shown there was an outbreak within a 20-kilometre radius of the insured premises which has caused a loss.

The decision says the insurer must accept the claim, but there’s insufficient financial evidence on hand to accurately assess the sum involved, and the parties need to fully exchange relevant information as soon as possible.

“The insurer is to then assess the quantum of the claim in accordance with the terms and conditions of the policy,” it says.

AFCA has mostly rejected covid-related business interruption complainant disputes in decisions released to date. Many of those have related to “hybrid” clauses where it has said closures must arise directly due to orders made by an authority as a result of disease at or within the radius of the insured’s premises.

Click here for the ruling.