Two small businesses are seeking insurance payout for income loss caused by the government shutdowns due to the Covid-19 pandemic. The matters will be heard on 2 October by the NSW Court of Appeal. The potential ramifications are significant, as it is estimated that business interruption claims due to Covid are worth in excess of $1 billion.

 

The insurance companies have so far refused to pay. They say that Covid-19 related claims are excluded from coverage. Specifically, they say that they do not cover loss arising from diseases declared “quarantinable” under the Quarantine Act 1908.

 

The difficulty is that the Quarantine Act was repealed in 2015.

 

The case has significant ramifications for the insurance industry. While the decision will not be binding on all insurers, it will impact on some of the largest insurers such as CGU, Vero, Zurich, Elders and GIO which all use similar exclusions, and which may well be exposed to a significant number of claims.