Insurers encourage business interruption policy claims after High Court defeat

An Australian insurance group has launched an advertising campaign encouraging pandemic affected business owners to lodge a claim, but warn that the “vast majority” of cases will be held up pending a decision in the Federal Court.

The High Court has rejected an application by the Insurance Council of Australia (ICA) to appeal a test case decision which sought to clarify whether COVID-19 was excluded from extra cover for infectious diseases in a business interruption policy.

In this first test case, insurers asserted that policies which reference the Quarantine Act (which was repealed and replaced in 2015) should instead be interpreted as the now referenced Biosecurity Act. In doing so, policy holders would need to claim against a listed human disease. Where the policy refers to an exclusion clause which notes that the list of diseases is subject to “subsequent amendments” insurers argued that these referred to future amendments.

The five judges of the NSW Court of Appeal unanimously found in favour of policy holders and determined that as COVID-19 did not fall within the scope of the exclusion clause, insurer’s liability extended to pandemic related business interruption cover.

The ICA argued against such findings in their special leave application to the High Court and contested that a mistake had been made.

Whilst the High Court’s rejection of the ICA’s application is an immense blow to the Australian insurance industry, it provides insureds with the long-awaited certainty over whether they can rely on the Quarantine Act exclusion and deny liability in policies written in the same terms as the first test case.

The ICA has responded to their defeat by encouraging small businesses to lodge their business interruption cover claims but note that they await further clarification from a second test case before a “vast majority” of claims can be finalised.

The second test case commenced by insurers in February 2021 intends to clarify the meaning of policy wordings for the definition of a disease, proximity of an outbreak to a business and prevention of access to premises due to government mandate. Whilst the knockback experienced in the first test case has left insurers “disappointed”, the ICS in their statement on special leave application has “committed to applying the decisions of both test cases in an efficient, transparent, and consistent way when assessing claims”.

What does this mean for policy holders?

The end of financial year provides significant challenges in the lodgement of a business interruption claim. We encourage small and medium sized businesses to seek an urgent assessment of their policy and start gathering evidence now to calculate losses sustained from the COVID-19 pandemic before the second test case is finalised.

Elit Lawyers by McGirr & Snell is one of the only law firms who can act for insurance policy holders (businesses and individuals) against major insurers. Our senior litigation team has a combined 60 years experience acting on behalf of major insurers and know how they work. To have your policy reviewed by our team, contact Danielle Snell and Robert McGirr.

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"We were forced to issue legal proceedings against the insurer for a number of reasons including disagreement about the amount of money that was required to be paid out under the policy to reinstate our home. I want to express our deepest heartfelt gratitude and appreciation for all Elit did for our family throughout this matter."

Insurance Policy Holder

Home owner

Thank you to Danielle and Mark and the Elit team for all their hard work in acting for myself and my family against a large international insurer following a fire sustained at our home. We were forced to issue legal proceedings against the insurer for a number of reasons including disagreement about the amount of money that was required to be paid out under the policy to reinstate our home. I want to express our deepest heartfelt gratitude and appreciation for all Elit did for our family throughout this matter.
The work of Danielle and Mark was professional, consistent and to the highest standard throughout this process. I was so impressed by each of the team. It wasn’t just their exceptional professional work that left the impression, but more importantly, their interactions as good, decent, kind individuals. Thank you Elit for captaining this litigation ship throughout the tiresome journey! We really appreciate everything you have done for us. I hope and pray that each one of you has a share in some of the comfort you have provided my family in your own lives.

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"Being subject to malicious false statements was very stressful, as I have always conducted myself with professionalism and integrity.  As a result of the action taken by Robert McGirr & Elit Lawyers, the false statements were retracted, I received a formal apology and was paid my legal costs. "

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I was engaged to appear on behalf of a resident at an aged care home in a proceeding before the Tasmanian Civil and Administrative Tribunal (TASCAT). A false and defamatory email was sent by a senior executive of the home about my conduct at the hearing to a number of third parties.

The false statements contained in that email were serious and damaging to my reputation, and included amongst other things, an imputation of criminality, which if proven to be true, could have resulted in a term of imprisonment. Being subject to malicious false statements was very stressful, as I have always conducted myself with professionalism and integrity. 

As a result of the action taken by Robert McGirr and Elit Lawyers, the false statements were retracted, I received a formal apology and was paid my legal costs. I could not have achieved this outcome without the assistance of Robert. I felt informed and comforted throughout the process and am very grateful for the early result that was achieved. 

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"I was devastated when I learnt of a very serious defamatory publication made against me. I was so grateful to Danielle and the legal team who were able to obtain a pseudonym order in my favour so that I was able to advance defamation proceedings with anonymity."

Defamation

Plaintiff

I was devastated when I learnt of a very serious defamatory publication made against me.

I was concerned that bringing a Court proceeding would lead to widespread media reporting which would in turn repeat the allegations made against me and cause even more harm to my reputation because let’s face it – mud sticks.

I was so grateful to Danielle and the legal team who were able to obtain a pseudonym order in my favour so that I was able to advance defamation proceedings against the publishers with anonymity and be comforted that the defamatory content linked to my name would not be further spread.

I felt vindicated at the end of the matter and will always look back on the experience as a difficult one but knowing that issuing the court proceedings was what I had to do in order to achieve redress and restore my reputation.

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"When we were targeted by a vexatious and unfounded online attack, I turned to Robert, Danielle, and Elit for advice. As I am a lawyer myself, Elit’s ability to zone in so quickly on what was best for us really impressed me. "

Defamation

Lawyer and Business Owner

As a lawyer and business owner, I take our professional reputation seriously.

When we were targeted by a vexatious and unfounded online attack, I turned to Robert, Danielle, and Elit for advice. Their calm, clear, and strategic guidance was exactly what we needed. They quickly understood the key issues and provided practical options that prioritised our values and professional standing.

I was impressed with their ability to get across the key issues and provide real life practical advice during this critical time which really centred around us and what was best for our business.

As I am a lawyer myself, Elit’s ability to zone in so quickly on what was best for us really impressed me.

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"My business was sued for defamation. The Eit team were able to pinpoint the weaknesses in the other side’s case and were able to resolve the proceeding on very favourable terms for us."

CEO

Medical Industry

My business was sued for defamation and my insurance company appointed Aggie, Danielle, Robert and the Elit team to act in my defence of the proceeding.

I was astounded by the fact that the Eit team were able to pinpoint the weaknesses in the other side’s case and after bringing an interlocutory application on my behalf, they were able to resolve the proceeding on very favourable terms for us.

I felt informed and comforted throughout the process and am very grateful for the early result that was achieved.

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"I felt comforted and informed throughout the legal process and was happy with the early resolution of the case which achieved my ultimate objectives."

Director

ASX Listed Company

Danielle and team acted on behalf of myself and my fellow directors of an ASX listed company in the Supreme Court of Western Australia involving repeated attacks and defamatory content being posted about us on a forum website. The third party website operator was also joined to the proceeding.

Given the personal attacks made against me and my fellow directors, it was a difficult situation over an extended period and I felt comforted and informed throughout the legal process and was happy with the early resolution of the case which achieved my ultimate objectives to have the content removed and undertakings that no future defamatory content would be published by the person involved.

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