Court documents obtained by insuranceNEWS.com.au outline the claim pathways and policy wordings that will be considered in the upcoming business interruption (BI) test case.

The Austin Tourist Park in Tamworth and the Thrive Health and Nutrition store in suburban Melbourne maintain they had cover in place as the COVID-19 outbreak gathered pace and disrupted the businesses, the documents show.

After claims were lodged, respective insurers HDI Global Specialty and Hollard declined cover, disputes went to the Australian Financial Complaints Authority and a test case over the wordings is now expedited to the NSW Court of Appeal on October 2.

Documents already filed to the NSW Supreme Court outline the issues at stake in the case, brought by the Insurance Council of Australia in order to bring market clarity.

The Tamworth caravan park insureds, Wonkana No 3 Pty Ltd, FA Edwards and CH Edwards, took out a 12-month Tourist Parks and Lifestyle Villages Insurance Policy with HDI Global on February 28 this year.

The business interruption section included an additional “murder, suicide or disease” benefit which provided cover for “the outbreak of a notifiable human infectious or contagious disease occurring within a 20 kilometre radius of the location.”

It also says “this additional benefit does not apply to any circumstances involving ‘highly pathogenic avian influenza in humans or other diseases declared to be quarantinable diseases under the Australian Quarantine Act 1908 and subsequent amendments”.

A claim was lodged, and then denied by HDI on July 10.

In the Thrive Health and Nutrition claim, cover that included business interruption was taken out with Hollard for 12 months from May 11 last year.

Extra cover was also included in the sum insured as part of a section for “infectious disease etc”. Similarly, it covered an “outbreak of an infectious or contagious human disease occurring within a 20 km radius of the premises”.

It says “there is no cover for highly pathogenic Avian influenza or any other diseases declared to be quarantinable diseases under the Quarantine Act 1908 and subsequent amendments irrespective of whether discovered at the premises, or outbreaking elsewhere.”

The business lodged a COVID-19 related claim with Hollard on March 27, which was denied on May 7. The insureds requested an internal review on May 15, with the original decision affirmed on June 12, and the dispute went to AFCA on June 24.

The court documents highlight that in dispute is the wording that refers to the Quarantine Act 1908, which was repealed on June 2016 and replaced with the Biosecurity Act 2015.

The first issue to be decided is “whether on their proper construction, the words ‘declared to be quarantinable diseases under the Quarantine Act 1908 appearing in the HDI Disease Benefit and the Hollard Disease Cover should be read as ‘which are listed human diseases under the Biosecurity Act 2015’.”

The insureds say that “on the proper construction” of the policies COVID-19 is not a disease “declared to be quarantinable diseases under the Australian Quarantine Act 1908’ and the exclusion in both of the policies does not apply.

If the court decides the Biosecurity Act does apply to the exclusions, an additional matter will then be determined.

The policyholders say in that case they are seeking a declaration the exclusion is “enlivened only in respect of listed human diseases determined under the Biosecurity Act 2015 at the date of inception” of the policies.

In contrast, the insurers seek a declaration that the exclusions apply for any listed human diseases determined under the Biosecurity Act “during the period of cover”.

COVID-19 has been a listed human disease since January 21 this year.