COVID-19 Melbourne Business Guide: Interruption Insurance Rejected
2020 has been tough on nearly every business in Melbourne due to the COVID-19 pandemic. The virus has been responsible for job loss and businesses that either closed their doors permanently or were forced to close temporarily due to the government’s response. The question that quickly flooded businesses was will the COVID-19 pandemic be covered under business interruption claims? Sadly, for many businesses these claims, business interruption insurance Melbourne were denied. However, recent rulings may work to the benefit of businesses throughout Australia, enabling businesses to still carry a claim against Business Interruption Insurers.
What is Business Interruption Insurance?
It is in the name. Business Interruption Insurance protects you against lost income and for extra expenses after a significant damaging event such as theft, fire, wind, falling objects, lightning and communicable diseases that result in a shutdown of your business.
COVID-19 Pandemic Melbourne
It is that last one, communicable disease, that has been a sore spot in Melbourne for much of the year. While many business owners believed COVID-19 fell under diseases that shut down a business, insurance companies denied business interruption claims due to the repeal of the Quarantine Act of 1908 which was replaced by the more recent Biosecurity Act of 2015. This repeal of the Quarantine Act was assumed to mean that Coronavirus/COVID-19 is not, and cannot be, a “quarantinable disease” under the repealed Quarantine Act of 1908.
However, the Biosecurity Act also carries a provision similar to the Quarantine Act called “listed human disease,” of which COVID-19 is identified as a listed human disease. Though, insurance companies claim that policies reference “quarantinable diseases” such as listed in the Quarantine Act, rather than interpreting the diseases as “listed human disease” under the modern interpretation of the Biosecurity Act. Confused? So are businesses throughout Melbourne who’ve been faced with rejected claims for business financial losses.
A Unanimous Decision
Denied claims are hard to repeal. Though, of significant note is that on 18 November 2020 a New South Wales Court of Appeal sided with business owners in a unanimous 5-0 decision and determined that COVID-19 is not a “quarantinable disease” based on the Quarantine Act of 1908, therefore should be covered by the Biosecurity Act as a “listed human disease.”
Appealing rejected insurance claims
So, what do you do when you have Business Interruption Insurance rejected in Melbourne? You do have a path to appeal your rejected Melbourne Business Insurance claim and here’s how you do it.
- Broker Advocacy: As an advocate your broker should be able to secure factual evidence such as reports and documents to help overturn the Business Interruption Insurance rejection.
- If your broker can’t get the insurance company to budge, your next option is to request your insurer to launch a formal internal dispute resolution process. All insurers are required to review disputes within 45 days. If the claim is still rejected the insurer must provide a reason that your claim was rejected. Your broker can also be your advocate throughout this process.
- If your claim remains rejected under the internal dispute resolution process you can pursue an external dispute resolution process through the Australian Financial Complaints Authority.
- In Melbourne you also have the ability to pursue the matter in court. This may not be a favorite option for many business owners, however that recent 5-0 ruling is a significant ruling protecting the claims of businesses and business interruption losses.
This is all good for businesses in Melbourne, though it must also be noted the importance of understanding that your business must first have business interruption insurance. In addition, there are complexities to the insurance such as what can be covered (revenue, mortgage and lease space, loan payments, taxes, payroll, relocation costs, temporary relocation costs, and training costs). Additionally, it is important to understand the restoration period of the coverage, how much coverage is right for your business, and the overall cost.
While 2020 was challenging for small businesses, the direction of recent court decisions helps to remove some of the concern and ambiguity less understood by businesses, and insurers rejecting business interruption claims.