The Insurance Council of Australia (ICA) is urging small business owners to submit a business interruption (BI) claim through their broker or insurer if they believe their situation makes them eligible for a payout.
The call to submit claims follows the High Court’s rejection of the application to appeal the judgement of the New South Wales (NSW) Court of Appeal in the first BI test case in Australia, which stated that references in insurance policies to a now-superseded Act of Parliament did not allow insurers to deny BI claims made because of the COVID-19 pandemic.
Some class action law firms claimed that the High Court’s decision only has implications for customers of the two insurers involved in the first test case, Hollard and HDI, and customers of other insurers still have to pursue separate legal remedies.
Read more: High Court blocks BI test case appeal
The second test case will determine the meaning of policy wordings around disease definition, COVID-19 outbreak proximity, the impact of government mandates, and other policy wording matters.
The ICA stated that its members have committed to applying court rulings in the BI test cases when assessing all claims.
“The test case process has been utilised to provide certainty across a range of questions, and with each final decision by the courts, insurers will commence assessing claims that will respond to each ruling,” said ICA chief executive officer Andrew Hall.
“It is the position of the ICA that policyholders affected by COVID shutdowns are entitled to lodge a claim with their broker or insurer against their business interruption cover,” he continued. “As we are also nearing the end of the financial year, lodging a claim on this matter can be complex and requires gathering evidence – that’s why policyholders should start that process now.
“While many claims will have to wait until the outcome of the second test case, lodging a claim now means that once that outcome is known, a resolution can take place quickly, providing certainty for policyholders.”
If an insurer denied a claim, the Australian Financial Complaints Authority (AFCA) can make binding decisions on claims up to $1.085 million free of charge for policyholders, in contrast to the substantial fees sought by class action funders and lawyers, the ICA said.
The finalisation of many claims may not take place until further clarity is provided by a second test case, underway now in the Federal Court.