The World Health Organisation declaring COVID-19 a pandemic, and travel bans being imposed across the world, may impact upon the cover available under travel, event and business interruption insurance policies. In particular:
Travel insurance policies are generally more likely to respond where a trip has been cancelled due to official restrictions on travel, rather than as a precaution. However, policy wording should be carefully checked. In particular, some wordings may contain broad exclusions for loss arising from a government prohibition or restriction. Other key factors may include the date on which travel was prohibited / restricted (or warnings issued) and whether the policy expressly excludes pandemics.
Event insurance is also more likely to respond where events have been cancelled in accordance with the Federal Government's directive, rather than as a precaution. However, such policies may also expressly exclude pandemics.
Business interruption insurance will generally only respond where there has been damage to property, but some insurance policies may extend cover for human infectious disease. If so, the precise wording will be important, as:
- some policies require closure or evacuation by order of a public authority (rather than precautionary measure). This may apply to closures forced by the directive against public gatherings of more than 500 people (though it may be arguable whether the directive itself is an "order");
- some policies instead require outbreak of a disease, but may be limited to where the disease has been detected at the premises or within a specified radius of the premises;
- bespoke insurance policies may be broader again; and
- some policies may also extend to cover to interruption due to closure of supplier's premises due to infectious disease or access restrictions.
Further, some business interruption insurance policies exclude "quarantinable diseases under the Quarantine Act 1908 and subsequent amendments". That Act has been repealed and replaced by other legislation including the Biosecurity Act 2015 (Cth) (which refers to "listed human diseases", not "quarantinable diseases") and it is unlikely the new legislation qualifies as a "subsequent amendment". This form of exclusion is unlikely to apply to COVID-19. However, exclusions which apply to "listed human diseases" or pandemics, rather than referring to the repealed legislation, will still be relevant.
Businesses should consider whether there are any circumstances which may give rise to a claim against them under their liability insurance (eg. public and products liability, employer's liability, directors' and officers' liability), for example arising out of failure to supply or the exposure of employees or the public to the virus. If so, they should review their notification obligations under the relevant policies and for “claims made” insurance, ensure notifications are made before expiry.
Below are some practical steps insureds can take to review and engage their insurances.