QBE must pay more than $15,000 to a short-stay rental landlord who lost several bookings at a mountain property in Victoria when government restrictions were imposed in response to the COVID pandemic early last year.

The property owner held QBE landlord insurance which included a cover extension for "forced evacuation by government authority".

In March last year, Victorian Premier Daniel Andrews declared a State of Emergency which granted police powers regarding the movement of people and to detain any person as considered necessary.

A series of stay at home directions were enacted requiring all inhabitants of Victoria to abide by rules as to reasons for leaving home. Border closures in other states and territories were also enforced later that month, and this restricted access to the property.

The Victorian police, an emergency service, established a squad to enforce restrictions, issued fines, set-up road-blocks and restricted access up and down the mountain where the property was located to local residents only.

QBE declined the landlord’s loss of rental income claim on the basis there was no forced evacuation or restriction of access to the property by emergency services and restrictions on travel did not constitute refusal of access by an emergency service to the property.

It said there must be a “necessary and express” connection to the incident and the property, and the emergency service refusal of access must be to the property. In this case, that did not occur, QBE said, and to extend the meaning of the clause to the circumstances of the loss was beyond the scope of cover and not commensurate with the premium paid.

The landlord took the matter to the Australian Financial Complaints Authority (AFCA) saying restriction of access was a listed event under the policy.

The pandemic was a unique circumstance but failure by QBE to include the risk in the cost and design of the policy did not mean it was not covered, and a statutory declaration from a resident in the area at the time of the restrictions detailed the police checks in the area during the lockdown.

AFCA ruled the claim was valid and QBE was required to pay $15,761.

“The complainant’s property could not be tenanted because of restriction to access by a Government Authority which was enforced by the emergency services. This is expressly covered by the policy and QBE incorrectly declined the claim,” AFCA ruled.

“It is fair QBE pays the claim and interest on the amount lost by the complainant."

QBE and the landlord were in agreement that the only relevant clause in the policy to the circumstances of the loss was "emergency services refuse you access to your home".

AFCA said the landlord demonstrated the property could not be occupied due to one of the listed events under the "forced evacuation by government authority" extension, which said if the home cannot be lived in because “emergency services refuse you access to your home or unit or evacuate you for safety reasons” it would “pay any resultant rent lost”.

QBE argued there was no evidence the home could not be lived in by a guest, or that an emergency service prohibited a guest from using the home. It also says the loss of rent did not happen in circumstances where an emergency service refused guests access to the home or that an emergency service evacuated the home for safety reasons.

AFCA said the landlord’s statutory declaration was “a true reflection” of the actions of the police at the time of the cancellations and it backed that version of events.

“While I accept QBE’s argument guests may not have been physically restrained from accessing the property, I do accept guests accessing the property would have been unlawful,” the ruling said.

“The Victorian police are an emergency service within the normal meaning of that term and this is conceded by QBE in its submission. There is evidence the Victorian police set up road blocks to ensure persons entering the area of the complainant’s property were entitled to do so,” it said.

The police had the ability to restrict the movement of any person within the state and failure to comply with the stay at home orders would have incurred a fine, AFCA said.

“Facing the threat of sanctions administered by an emergency service is sufficient to show restriction of access. There are no guests that could lawfully access the property and while physically they may have been able to do so, it would be in contravention of the Victorian government restrictions and potentially result in sanctions.

“I am satisfied a Government Authority issued an order and an emergency service enforced the order. The order would impose sanctions on guests if they were at the property without lawful reason. This is a restriction of access to the property within the meaning of the policy.”

See the full ruling here.