Beauticians that were forced to shut down due to Victorian government orders during the pandemic have lost claim disputes as the state’s restrictions were not directly tied to outbreaks near their business locations. 

The Australian Financial Complaints Authority (AFCA) is working through claims lodged during the pandemic after awaiting completion of an industry legal test case process to provide clarity on policy wordings, including around hybrid clause links between local outbreaks and state mandates. 

The two cases involving beauticians in Bendigo and Altona Meadows found that orders relating to non-essential activities had caused them to close, and it was reasonable to accept that covid outbreaks most likely did happen within a 20-kilometre radius of both. 

“The issue, however, is not whether there was in fact an outbreak of the disease but whether the order made was ‘as a result of’ infectious or contagious human disease at the premises or within the 20-kilometre radius,” the AFCA decision says. 

“Insofar as the government orders are concerned, the orders were general orders. The orders were the result of a government’s concern for the public health risk that Covid-19 presented to the state.” 

The decisions in favour of Suncorp also found that even if the complainants were able to show the orders were a result of an outbreak within their areas, exclusions in both policies citing the Biosecurity Act would apply, AFCA says. 

The Bendigo salon’s policy initially cited the repealed Quarantine Act, but a supplementary product disclosure statement (SPDS) issued on February 25 2019 was included in a renewal pack sent in February 2020. 

The complainant says the insurer failed in its duty of care by taking so long to update the policy after the Quarantine Act 1908 was repealed in 2015, and should have included reference to the Biosecurity Act in the product disclosure statement not the supplementary document. 

But AFCA says the complainant doesn’t dispute receiving the SPDS and the insurer is entitled to rely on its modifications. 

AFCA has said in pandemic-related decisions that it recognises that covid has had a devastating impact on small businesses throughout Australia, but it has been guided by the interpretation of policies by the Federal Court. 

“It is fair that the insurer be entitled to rely upon the terms and conditions of the policy to deny liability for the claim,” it says. 

The cases are available here and here.