Insurance answers regarding Coronavirus
Coronavirus took the world by surprise and the continuing uncertainty is concerning for us all. We have received many enquiries about insurance coverage for the impacts of loss of business income and cancelled trips.
When this article was first released back in early March 2020 the effect of covid-19 was still unknown. Australia hadn’t closed its borders at that stage and we hadn’t introduced many restrictions to our way of life. We were all in an almost wait and see situation.
We wrote this article at the time to provide some general guidance to our dental clients, because despite not yet experiencing the restrictions that were to come, queries were already being raised based on the effects felt at that early stage by some. Dentists were some of the first businesses to contact us regarding the effects of covid-19 on their businesses due to the shortage of surgical masks and the roll on effect this has with the number of patients which could be seen. As we know, much tighter restrictions were introduced that had even greater effects on businesses and travel than we could have foreseen in early March 2020.
Business Interruption – Loss of Profits
A lot of time has passed since then and a lot has changed in our way of living. This has also allowed time for discussions regarding insurance coverage. Some of these discussions turned into a test case which was run by Insurance Council of Australia (ICA) and Australian Financial Complaints Authority (AFCA). The test case was heard by the NSW Court of Appeal and specifically addressed an exclusion that was contained in some Business Interruption insurance policies which referred to ‘The Quarantine Act 1908’ which has since been replaced by new legislation.
The decision handed down in the NSW Court of Appeal in a test case ruled in favour of the insured / policy holder. It found that the quarantine disease restriction in Business Interruption covers that referred to the now repealed Quarantine Act, does not exclude cover for listed human diseases under the Biosecurity Act 2015. This is a decision that may still be appealed in the High Court and determinations on claims can only be made once the legal process has been finalised.
The decision doesn’t mean that Business Interruption cover will now automatically respond to covid-19 related claims as there are other factors that are to be considered when determining cover. This is only one (not yet finalised) piece to a puzzle.
Before a claim can be paid there must be a loss that is covered by the policy. The majority of our dental clients are insured under a Practice Insurance with Chubb Insurance. Chubb have provided guidance that their policy may now respond to covid-19 claims, but only if an outbreak occurred at the insured premises and assuming that the recent ruling is not overturned at appeal.
The restrictions felt by businesses during the numerous lockdowns across the country were generalised lockdowns across, in some cases, entire states. If a dental practice had an outbreak of covid-19 occurring at their practice then there may be consideration for a Business Interruption claim.
A separate extension in the policy for closure by public authority is only triggered following a threat of insured damage within a 50km radius. Insured damage is defined in the Business Interruption section of the Chubb Practice Insurance policy as Property Damage, Theft, Money, Glass or General Property – each of these type of loss or damage are defined in the policy.
Covid-19 whilst causing much harm to the economy, would not normally be considered to be physical damage to our property or money. Therefore loss of income claims arising out of covid-19 would be unlikely to trigger this extension.
Travel Insurance, like any insurance, would not cover a situation that is not unforeseen, or a situation that is likely to occur. DFAT has an alert for travel anywhere in the world currently of ‘do not travel’ for all Australian Citizens and Permanent Residents and international travel is only allowed for compelling and compassionate circumstances with an exemption granted through Australian Border Force. Travel within Australia between states changes, what seems like at times, almost daily. We would therefore strongly recommend checking all warnings before undertaking any travel and speaking to your travel insurer with regards to options for Travel Insurance.
The covid situation is changing and we all have had to adjust in different ways. We understand the uncertainty and we welcome any queries or questions that you might have regarding the above information.
First written 5 March 2020
Edited 24 February 2021