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27 July 2020
The Australian Financial Complaints Authority (AFCA) says two complaints have been identified to head a test case on business interruption (BI) wordings.
“We expect that proceedings will be issued in either the Federal Court or Supreme Court of NSW shortly,” an AFCA spokesman told insuranceNEWS.com.au.
“There is confusion over whether businesses affected by the pandemic lockdown are covered by their business interruption insurance policies.
“The confusion arises from policy wording relating to federal legislation covering pandemics.
“Many businesses have insurance policies that exclude ‘quarantinable diseases’ under the old Quarantine Act 1908. That Act was repealed in 2016 and replaced by the Biosecurity Act 2015.
“A threshold issue arises as to whether the Biosecurity Act applies to those policies that only reference the Quarantine Act.”
AFCA says it has had 30 complaints relating to BI and COVID-19.
“Once the outcome of the test case is known, it will provide the guidance that will enable AFCA to determine its approach in respect of future matters,” the spokesman said.