Coronavirus (COVID-19) & Business Interruption
With Coronavirus (COVID-19) officially declared a Pandemic in March 2020, and the situation changing almost daily, there is an air of uncertainty across Australia. Aside from the impact Coronavirus is predicted to have on our health system, there are also implications for the economy and potentially your business.
The number one question we are being asked by clients at the moment is :How will my business insurance coverage respond or be impacted as a result of COVID-19?”
Business Interruption Cover
Generally speaking, general insurance is unlikely to provide protection against losses and business interruption associated with a pandemic such as COVID-19. Traditionally, business interruption policies were only designed to cover disruption resulting from ‘direct physical loss or damage’ to insured property caused by a covered peril, which outbreaks such as COVID-19 are not.
Over time, many business interruption policies have been expanded to cover temporary closures due to a number of other risks, some of which include infectious diseases. . Some policies do provide coverage for an outbreak up to a certain distance from the business location, but MOST only cover outbreaks isolated to the insured premises.
The coverage in standard Business Package Insurance policies is not designed to insure against disruption caused by an infectious disease outbreak in a different state or country.
What about a Pandemic?
The outbreak of SARS in 2013 lead major insurers and reinsurers to reassess their risk modelling in the event of a major pandemic. This showed that the global pool of insurance funds would not be able to meet the cost of business interruption claims which would occur in a pandemic situation. The insurance industry would quite simply collapse.
In response to these findings, most insurers and reinsurers added exclusions to insurance policies effectively excluding cover for any disease that is notifiable under the Quarantine Act 1908 and the Biosecurity Act 2015.
As of the end of January 2020, COVID-19 became a listed disease under the Biosecurity Act, and in March a pandemic. Regrettably, this means there is essentially no insurance protection for disruptions to business arising from COVID-19. Ultimately, it’s the insurers decision to deny a claim and so we encourage anyone who is unsure on their cover to please contact your insurance broker or insurer to clarify.
If you have any questions on your Business Insurance and Business Interruption cover, please contact us on (07) 5482 7485.