Two businesses made claims for business interuption under their respective policies of insurance issued by HDI Global Speciality SE (“HDI“) and The Hollard Insurance Company Pty Ltd (“Hollard“). The insurance policies provide cover against the happening of events likely to cause loss or damage in the conduct of a business. The HDI insureds operate a caravan park in Tamworth, New South Wales and were issued insurance for the period 28 February 2020 to 28 February 2021. The corporate insured under the Hollard policy conducts a retail health food store in Maribyrnong, Victoria. That policy was issued on 30 April 2019 providing cover for the period 11 May 2019 to 11 May 2020.
The standard form product disclosure statement and policy wording issued by HDI, and current at the time its policy was written, came into effect on 1 January 2020. The form of disclosure statement and policy wording issued by Hollard was adopted with effect from 1 April 2019. Section 2 of each policy provides cover against business interruption. That cover insures against the interruption of, or interference with, the relevant business in consequence of loss or damage to property insured under the policy.
Each policy provided “additional” or “extra” business interruption cover, including against the outbreak of an infectious or contagious human disease. Although the language of that cover differed between the policies, each contained an almost identical exception.
The HDI policy deems the occurrence of specified events to constitute “damage to property used by” the insured at the insured location with the result that interruption or interference with the business happening in consequence of such an occurrence is covered. Those events include:
3. the outbreak of a notifiable human infectious or contagious disease occurring within a 20 kilometre radius of the location; …
The cover provided under part (1) and (3) of this Additional benefit does not apply to any circumstances involving ‘Highly Pathogenic Avian Influenza in Humans’ or other diseases declared to be quarantinable diseases under the Australian Quarantine Act 1908 and subsequent amendments.
The Hollard policy provided that it “… will cover You for interruption to or interference with Your Business due to”:
… (b) an outbreak of an infectious or contagious human disease occurring within a 20 kilometre radius of the Premises, however there is no cover for highly pathogenic Avian Influenza or any other diseases declared to be quarantinable diseases under the Quarantine Act 1908 (Cth) and subsequent amendments irrespective of whether discovered at the Premises, or out-breaking elsewhere;
The Quarantine Act 1908 (Cth) was repealed on 16 June 2016 and replaced with the Biosecurity Act 2015 (Cth). Under the former a “quarantinable disease” was “any disease declared by the Governor-General, by proclamation, to be a quarantinable disease”. That term and concept is not used in the Biosecurity Act which provides that a human disease which can be communicable and cause significant harm to human health may be determined to be a “listed human disease”.
On 21 January 2020, COVID-19 became a listed human disease under the Biosecurity Act. Unsurprisingly, at the time the Quarantine Act was repealed COVID-19 was not a “declared quarantinable disease”.
HDI and Hollard declined to indemnify their respective insureds against business interruption due to COVID-19. Each relied on the exception contending that the words (in the form used in the HDI policy) “declared to be quarantinable diseases under the Australian Quarantine Act 1908 and subsequent amendments” are to be construed as if they read “determined to be listed human diseases under the Biosecurity Act 2015 (Cth)”.
The Court held dismissing the summons, that COVID-19 is not a disease “declared to be a quarantinable disease under the Quarantine Act 1908 (Cth) and subsequent amendments”, and accordingly was not excluded from the Disease Benefit clauses, because (amongst other reasons) on their proper construction, the words “and subsequent amendments” do not extend to or include the Biosecurity Act, which was a separate Act.
The Insurers filed an application to appeal to the High Court of Australia, and on 25 June 2021, the High Court dismissed the appeal application and orderred the Insurerrs to pay costs.
Currently there is another test case before the Federal Court of Australia, dealing with the impacts of Covid-19 and insurance policiy exlusions we will post an update when the matter is decided.
If you have had an insurance claim denied on the basis that Covid-19 claims are excluded, then get in touch with us, for a review of your insurance policy and advice about whether it responds to your claim and any legal remedies and options you may have.