A caravan park near Tamworth that was part of the first covid-related business interruption test case on exclusions citing the Quarantine Act will have its claim paid after the Australian Financial Complaints Authority (AFCA) ruled in its favour on other parts of the cover. 

Austin Tourist Park Owner Frank Edwards says he was approached for the claim to be used for the test case in 2020. The insurance industry took on the policyholder legal costs and processes for the claims considered by the courts. 

Policyholders won the first test case on the exclusion, while other matters on wording hurdles were considered by the courts in a second test case, using different policies, with outcomes providing guidance for AFCA in resolving disputes. 

The amount to be paid to the caravan park under its policy is still being finalised following the AFCA decision in its favour. 

“The process has been lengthy,” Mr Edwards told insuranceNEWS.com.au. “It is an interesting process to go through, I think it will be worthwhile in the end.”  He says the possible claim payment wouldn’t be big money “in this day and age”. 

AFCA’s decision, which doesn’t name the park in line with its rules for reporting dispute outcomes, says the business held a Tourist Parks and Lifestyle Villages policy with HDI Global Specialty. 

The claim was made under the Murder Suicide or Disease additional benefits section for losses during the year starting March 23 2020. 

The business was shut to tourists 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. 

Issues examined by AFCA centred on whether a covid “outbreak” had happened within 20 kilometres of the business, as required under the “Disease clause”, taking into account that the Federal Court had ruled that the discovery of a person in the community with an infectious disease such as covid satisfies the definition of an outbreak. 

AFCA heard that a passenger on the Ruby Princess cruise ship had returned to his home, which was 14km from the insured premises, on March 19 and 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 was argued, while other points put for the insured included that there were likely 11 covid cases in the Tamworth area within a seven-day period from March 22. 

The insurer’s case included 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. “I am satisfied, on balance, the complainant has shown there was an outbreak within a 20-kilometre radius of the insured premises which has caused a loss.” 

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

Click here for the AFCA ruling 

The High Court 2021 decision rejecting special leave to appeal in the first test case is available here.