A country hotel that said customers stayed away after word spread that a housekeeper had covid has lost a claim dispute.

The north Queensland business, in a town with a population of about 4500 people, had a bistro and accommodation, and its patrons were mostly from the area.

It said a housekeeper who worked at the hotel on February 14 2020 phoned “approximately” the next day to say she had tested positive for the virus.

The hotel director said he noticed a drop in customer numbers after many regulars heard of the “outbreak”, basing his observation on recollections and discussions with patrons and locals.

On May 28 last year, the business contacted its insurer about claiming for a loss under an infectious disease benefit, for an event “at the location”.

The claimant referred to a government website indicating covid could be unknowingly spread to others in the two days before symptoms appeared or someone discovered they had it.

Lloyd’s Australia said Queensland’s first confirmed covid case was announced on January 29 2020 and the National Notifiable Diseases Surveillance System had recorded only 15 cases nationwide, all linked to travel from China, by February 15.

Testing in mid-February was mainly limited to travellers from high-risk countries and their close contacts. PCR testing was in major hospitals and public health laboratories, with extremely limited capacity in regional areas, it said.

The insurer argued the claimant’s statements of evidence were prepared more than four years after the housekeeper “allegedly tested positive” and there was no objective corroborative evidence.

The Australian Financial Complaints Authority says it is not satisfied the housekeeper was at the hotel on February 14 with the virus.

“Memory is fallible, especially as time passes”, and it is relatively unlikely someone in a small town in Far North Queensland would have had covid on February 14 or been tested the next day, it says.

Providing first-hand evidence would not have been impossible or particularly onerous for the complainant and it has not adequately explained why it could not ask the housekeeper for relevant medical records, or why employment records were not provided.

The claimant has not established a claimable loss under its policy terms, AFCA says.

The decision is available here.