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Hollard hit with BI lawsuit from gym owner

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Legal proceedings have commenced in the Federal Court against Hollard Insurance over a business interruption (BI) claim dispute.

Shine Lawyers says it filed the lawsuit on behalf of a Victorian gym owner, whose business took a hit from two COVID lockdowns imposed in the state last year.

Senior Commercial Disputes Solicitor Joseph Crane says the insurer rejected the claim on grounds that COVID-19 is excluded in the BI policy, which referenced the repealed Quarantine Act 1908 that has since been replaced with the Biosecurity Act 2015.

According to Mr Crane, Hollard cited a “redundant law” that the NSW Court of Appeal ruled in November cannot be used by insurers to exclude cover for COVID-19 disruptions.

The ruling was made in the first BI test case launched by the Insurance Council of Australia (ICA) and the Australian Financial Complaints Authority to resolve uncertainty about some outdated wordings in pandemic exclusions.

Last week the High Court of Australia agreed to hear oral arguments supporting ICA’s application to appeal the ruling, with a date for the hearing to be determined in May or June at the earliest.

Hollard has declined to comment on the specific legal action from the gym owner, with a spokesman saying the insurer “does not comment publicly on individual claims for confidentiality reasons”.

“We acknowledge the policyholder’s claim and note its subject matter overlaps several coverage-related issues presently before the courts, as industry test cases, for determination,” the spokesman told insuranceNEWS.com.au.

“We do not wish to pre-empt the legal process in this matter and so will not be speaking publicly about these cases.

“The industry is awaiting a final resolution of the test case issues. Until then there is likely to be no change to the status of claims currently lodged.

“Once the final test case determinations are made, we will finalise claims considering those determinations. We will then be in touch with all claimants who have lodged a claim with us.”

Mr Crane says there is no reason to delay seeking compensation through the courts after the NSW Court of Appeal ruled in favour of policyholders in the first BI test case.

“Small businesses hit hard by the lockdowns in Victoria and elsewhere in Australia have waited long enough to receive interruption insurance payouts in line with their policies,” he told insuranceNEWS.com.au.

“We don't think it's fair that insurers deprive their customers of financial support any longer, especially given their legal arguments were unanimously rejected by the NSW Court of Appeal.

“While it is their right to appeal to the High Court, we're confident a decision in favour of the insured will be made and therefore saw no reason to delay litigation on behalf of our clients.”

Shine Lawyers says the gym owner estimates his business would have generated at least $235,000 in revenue had it not been for the lockdowns. His BI policy provides for lump sum payments capped at $450,000 when events beyond human control affect operations.