ICP, Clayton Utz to take legal action over business interruption losses

ICP, Clayton Utz to take legal action over business interruption losses | Insurance Business

ICP, Clayton Utz to take legal action over business interruption losses

Litigation funder ICP and law firm Clayton Utz have joined forces to take legal action on behalf of business interruption (BI) insurance policyholders against insurers that rejected claims for losses following COVID-19 pandemic-related closures.

The organisations' decision follows the New South Wales Court of Appeal ruling last November in a BI test case, rejecting insurers' argument that policies should not cover COVID-19 pandemic-related losses.

ICP, which will fund the class action, asks all businesses that suffered COVID-19 pandemic-related financial losses to submit their BI insurance policies for review before registering interest in the legal action against insurers. Meanwhile, Clayton Utz will advise individual businesses on whether they have a basis for pressing their BI claim and consider joining in the class action, reports Business News Australia.

“COVID-19 cut a swathe through the livelihoods of thousands of business owners who, through no fault of their own, were forced to close for extended periods,” said ICP managing director John Walker, as reported by Business News Australia.

“If they have valid claims for business interruption losses, then insurers need to step up, not deny and delay payment. Our message to business owners is, do not take your insurer at its word when it says you're not covered for BI losses – check your policies closely and get independent advice.”

Walker said ICP and Clayton Utz plan to engage constructively with insurers to see if they can resolve the claims without legal action. However, if legal action is still necessary, Clayton Utz will act for the lead applicants in the proceedings.

“The Courts have spoken decisively on this issue, and insurers need to respect that. For many businesses, the payout of their BI insurance claim is all that stands between ongoing viability and collapse,” he continued.

“Insurers have an important role to play in Australia's recovery from COVID and the public expects them to meet, and not shirk, their legal obligations. They should be actively assessing claims and communicating with policyholders, even while their application to appeal to the High Court is considered.”