A hair salon owner has lost a dispute over three days of missed business during Cyclone Alfred.

The Australian Financial Complaints Authority says suspension of public transport, workplace health and safety obligations, and disaster warnings “gave the complainant understandable reasons to close and it was sensible to follow them”.

But this does not meet a policy extension requiring prevention of access by a public authority, it finds.

There was no direction that stopped staff attending or clients visiting, and the Gold Coast salon’s policy did not cover closure “due to inclement weather, or even safety concerns”.

An AFCA member said: “I accept the threat element. Cyclone Alfred threatened damage to property well within 50km of the premises, as the insurer’s assessor recognised.

“But the [relevant policy] clause refers to the actions of authorities rather than an environmental threat.

Related article: Travel insurer fails to show carelessness in case of missing laptop

“The warnings advised people to prepare to take shelter, then to stay indoors. They were serious warnings issued in response to a serious event.

“They did not prohibit the salon from trading, and there is no evidence any authority closed the roads leading to the premises by order.”

The salon closed from March 6-8 last year. The premises were not damaged, and Suncorp declined the claim for business interruption because no formal evacuation order was issued for the suburb, and access was not prevented.

The policy had a “prevention of access” extension covering interruption from damage to property “in the vicinity of the premises which shall prevent or hinder the use or access”.

Fallen trees blocked a road at the salon owner’s home, roads flooded near a manager’s home and in a neighbouring suburb, and routes were closed across the Gold Coast.

But the ombudsman says that only shows disruption across the wider region, and the extension did not respond in the hairdresser’s case.

“I accept vicinity is not defined [in the policy] and cannot be reduced to a single fixed distance.

“Still, in its ordinary meaning it directs attention to damage near or about the premises, not to disruption anywhere on routes people may happen to use to travel there.

“That is enough to decide the point. The fallen trees were at the owner’s street, well away from the premises. The flooding near the manager’s home was also away from the premises. Both of these were in different districts.”

AFCA has also denied a request for $1500 reimbursement for time spent on the complaint, saying gathering documents, answering questions and making submissions are ordinary parts of the claims process.

See the ruling here.

---

From the latest Insurance News magazine: Why some stakeholders reckon insurers' redrafted code of practice falls 'far short' of what is needed to protect customers

---