COVID-19 Insurance Questions Answered
The rapid spread of Novel Coronavirus (COVID-19), which originated in Wuhan City in China at the end of 2019, has caused significant disruptions worldwide. On 11 March 2020, the World Health Organisation (WHO) declared the COVID-19 outbreak a Pandemic¹.
Not only has this become a human tragedy as a growing number of lives are lost, the COVID-19 outbreak is now posing a significant threat to businesses and their suppliers, particularly given China's role as a global manufacturing superpower.
As the situation continues to develop, businesses are understandably seeking to determine how their current insurances respond to COVID-19 related loss. The following article looks to answer some of the most common queries
Pandemic Exclusions that do not reference the Biosecurity Act
Important Note: The general advice below is current as at 23 November 2020 and could be subject to change. How your business interruption policy will respond to a claim depends on the relevant facts of your claim and the particular policy wording you are insured under. For this reason, it is always best to consult with your insurance broker for advice before making a decision about whether or not to make a claim.
- For policies with pandemic exclusions that refer to the Quarantine Act without referencing the Biosecurity Act 2015 (Cth)
Referring specifically to policies with an exclusion for losses arising from a pandemic where the 'disease' has been designated under the now repealed Quarantine Act 1908 (Cth), without also citing the current Biosecurity Act 2015 (Cth).
Proceedings filed on the 13th of August 2020, in the Supreme Court of New South Wales, (now being decided by the NSW Court of Appeal), have sought to test the effectiveness of certain infectious disease exclusions found in many Australian business interruption policies. The case consists of two separate small business claims that were lodged with AFCA as part of its dispute resolution process.
On the 18th of November 2020, the NSW Court of Appeal ruled against insurers. The court held that COVID-19 is not a disease "declared to be a quarantinable disease under the Quarantine Act 1908 and subsequent amendments", and "accordingly was not excluded from the disease benefit clauses".
The ICA is currently consulting with members to potentially appeal the decision to the High Court. Parties are able to lodge disputes up until December 16th.
You can read the judgement here.
While an appeal is highly likely, this result may impact other policyholders ability to make successful claims under policies with similar exclusions.
How each business interruption policy will respond to a claim depends on the relevant facts of the claim, and the particular policy wording issued to the insured. We encourage you to contact your insurance broker for personalised advice.
- For policies that do not include a pandemic exclusion, or contain a pandemic exclusion that applies only to 'infectious disease' coverage clauses and not to other coverage clauses in the policy such as 'prevention of access' or 'closure by authority' coverage clauses:
You may be able to claim for losses arising from COVID-19 under these policies. We encourage you to contact your insurance broker urgently for personalised advice.
Do Corporate Travel Insurance policies cover cancellations due to Coronavirus?
A typical Corporate Travel Insurance policy will provide cover for cancellation costs where the travel destination has reached DFAT Advice of Level 4 - Do Not Travel and was not at this level at the time of booking.
You can check the current DFAT Advice Levels on https://www.smartraveller.gov.au/, the Department of Foreign Affairs and Trades website.
Fear of travel is not a covered event under a Travel Insurance policy. This includes travel to areas that have known cases of COVID-19 but have not yet reached DFAT Advice Level 4.
The coverage provided on each policy and the position taken by different insurers can vary. If you have concerns, it's a good idea to contact your insurance broker or insurer directly.
Important Notice: COVID-19 became a known risk on 24 January 2020, and as such, some insurers may look to decline claims arising from COVID-19 if the trip was arranged on or after 24 January 2020. Whilst not all insurers are taking this position at this time, it should be taken into consideration when making future bookings.
Is Coronavirus covered under a Workers Compensation policy?
Yes, under specific circumstances.
According to the State Insurance Regulatory Authority (SIRA) COVID-19 can be covered under Section 4 of the Workers Compensation Act 1987 as a disease injury². A claim would be successful where the virus is contracted during the course of employment and the employment is found to be the main contributing factor to contracting the disease.
Proof that employment is the main contributing factor is likely to be difficult to determine and each claim would need to be considered on its individual merits and evidence.
Employers are advised to take all appropriate preventative measures to eliminate the risk of employees contracting COVID-19 in the workplace, as with any other workplace health and safety risk.
Where employees are potentially exposed to the virus as part of their employment, employers should provide guidance and assistance to the employee to make a claim for workers compensation.
Should you have further enquiries about Workers Compensation or managing WHS risk in respect to COVID-19, contact our Coverforce Workplace Services team directly on 02 9098 5500
How can I help to manage my business' risk?
As with any other threat, it is important to consider what risk management procedures you can introduce to help mitigate your exposure.
Some ways to manage your business' risks with respect to COVID-19 include:
- Keep up to date with any official alerts and guidelines from relevant public health officials and governments. The Australian Department of Health updates their COVID-19 alerts every day with the latest medical advice and official reports. You can access these updates and other useful information here.
- Review and promote business policies to reduce the chance of the virus spreading through your workplace. Plan your immediate response and actions required in the event of a suspected outbreak. For example, fitness for work policies, home quarantine regimes for those who have travelled to an infected country or come into contact with someone who may have been infected, flexible working arrangements, corporate travel rules etc.
- It is important that you inform all employees, including contract staff, on how best to report any potential exposure or the development of virus symptoms. If one of your employees does present with symptoms of illness or report that they have been officially diagnosed with COVID-19, you must act quickly to avoid the virus spreading throughout the workplace. If you are unsure on how to respond, The Australian Department of Health has a helpful guide for employers.
- Arrange hand sanitiser and other workplace hygiene measures such as signs to encourage all employees and visitors to practice good personal hygiene and to manage the spread of the virus.
- If possible, limit any non-essential business travel. Where an employee is travelling overseas, it's a good idea to check any relevant travel warnings or restrictions on the Smart Traveller website.
- Design a business-specific continuity management plan to identify and plan your response to any immediate or prolonged impacts on business operations and continuity, supply chains, productivity, reputation and cashflow should your workplace be impacted, or the global outbreak continues to worsen.
- Protect the mental wellbeing of employees who may be concerned about contracting COVID-19. Maintaining clear and frequent communication can help to provide reassurance to employees regarding their welfare. Beyond Blue has released helpful information about mental health during the COVID-19 outbreak. You can access this here.
The impacts of the COVID-19 outbreak to your business could be significant. Planning and preparation is key to minimising the impact on your business, employees and those you do business with.
Health Alert, Updates and Reports
Information Sheet for Employers regarding COVID-19
Managing Workplace Risks during the Coronavirus Outbreak
Safework Advice for PCBUS
Latest DFAT Travel Advice and Updates
About your insurance
For further information in relation to your insurance, please get in touch with your Coverforce broker directly, or contact your local Coverforce Office.
For the latest updates or enquiries in relation to the COVID-19 outbreak, you can contact the National Coronavirus Health Information Line on 1800 020 080. Calls can be made 24 hours a day, seven days a week. If you require translating or interpreting services, call 131 450.
The information provided in this article is of a general nature only and has been prepared without taking into account your individual objectives, financial situation or needs. If you require advice that is tailored to your specific business or individual circumstances, please contact Coverforce directly.
This information has been published as at 13 March 2020 and may change over time as new information is made available. This information was last updated on 13 November 2020.
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