Frequently Asked Questions - Business Interruption Claims

My broker or accountant said I couldn’t make a claim – are they right?

Many people have been told by their insurance broker or accountant that they can’t make a claim for business interruption due to COVID-19, because their policy doesn’t cover a global pandemic. This is overly simplistic and most likely untrue.

Every policy is different and your unique claim needs to be assessed against your insurance policy’s product disclosure statement (the PDS).

Call ACE Advocates to discuss your unique situation
Call ACE Advocates to discuss your unique situation

How do you know?

We have already lodged claims for business interruption for several clients.

Additionally, we’ve examined many different PDS’s from a variety of businesses to find out exactly what is allowable regarding COVID-19.

That’s after spending hundreds of hours researching; analysing the relevant legislation, examining policy documents, talking with lawyers and insurance brokers and questioning the Financial Ombudsman (now called AFCA; the Australian Financial Complaints Authority).

All that investigation means we have a thorough understanding of what is possible.

Why do you think I might be able to make a claim?

Most policy documents indicate a piece of legislation that is no longer used called The Quarantine Act (1908). It was wholly repealed in June 2016. There is now a different piece of legislation called the Biosecurity Act, which was assented in 2015.

If your policy refers only to the Quarantine Act (1908) plus amendments and doesn’t specifically mention the Biosecurity Act (2015), then there is a strong likelihood your claim can be lodged.

Who else supports this view?

Several law firms have reported that many businesses may be eligible to make a claim for business interruption due to Covid-19.

Read an opinion from a senior litigator in insurance and financial products from Maurice Blackburn here:

What you need to know about business interruption insurance

Can my business be helped?

Any business that has been deemed ‘non-essential’ by the Victorian Government and forced to close may be eligible to make a claim for business interruption.

This includes businesses such as; restaurants, gyms, tattooists, yoga studios, play centres, cafes and many others. Contact ACE Advocates to see if we can help your business to lodge a claim.

Have your claims for business interruption due to COVID-19 been successful?

We have only recently been able to lodge claims related to COVID-19 and we won’t know for several months whether or not they will be successful.

What if my claim is denied?

If an insurance company denies your claim, that’s not the final word. We can then challenge their decision by submitting a complaint to AFCA.

As an independent regulator, AFCA will review your complaint in a fair and unbiased manner. AFCA’s ruling is binding and must be followed by the insurance company.

How long will it take to get a result?

It depends on several factors. It will take one to two weeks to prepare the documentation for your claim. It may take your insurance company several months to make a decision. Some insurance companies have already flagged that they will deny the claim irrespective of the legitimacy of the circumstances and the policy document. If the claim is declined, we can lodge a complaint with AFCA.

How long will it take AFCA to make a decision?

We have been in regular contact with AFCA. As of August 2020, the parameters for a test case are being prepared. During the next month or two, a test case will be conducted in the Federal Court by a law firm appointed by AFCA to argue both sides of the argument. It is likely that AFCA will prepare guidance about how insurance companies must interpret specific clauses in policy disclosure statements. Whilst some insurers may argue that the Biosecurity Act should replace the Quarantine Act as an exclusion, this may not be allowed. Several insurance lawyers have suggested that claims below $1 million will be paid out whilst larger claims for bigger businesses may end up in the courts.

An article in the Sydney Morning Herald provides further details: Insurers deny claims as battle begins

How much will it cost to explore my options?

There is no charge for us to review your policy documents and discuss your situation so that you can decide if you would like to lodge a claim.

Who pays to prepare my claim?

Most business policies include a separate allowance that covers the cost of preparing your insurance claim. We have several options for payment depending on the complexity of the claim and your propensity to risk. The options range from making an upfront payment that is reimbursed if the claim is successful or we offer an option so that if your claim isn’t successful there is no fee.

What’s the benefit of using an advocate?

Insurance claims are time consuming, stressful and difficult; there’s a lot to know, a lot to do, and there’s a lot at stake. Getting it right is important.

When it comes to business interruption claims, ACE Advocates know exactly what to do. From assessment and report preparation to claim submission and ongoing communication, we will help you to get the best possible result for your claim.

Why do I need an advocate?

An advocate is only interested in helping your claim succeed. We work only for you and our advice and support is independent and unbiased. Our continued success depends entirely upon achieving the best possible result for your business that your insurance policy and level of cover can provide.

What’s the first step?

Get in touch. We’ll quickly review your policy and let you know if you should make a claim.