A Victorian hairdressing salon will be covered for three loss periods resulting from the covid pandemic after the industry ombudsman ruled they stemmed from the same insured peril.

The salon argued five periods should be covered under its business interruption policy after its insurer accepted a claim just for the first.

Hollard said an exclusion introduced at a July 2020 renewal, citing diseases listed under the Biosecurity Act, meant the second to fifth periods were not covered.

It agreed to pay $38,154 for the first period from March 9 2020 to October 18 2020.

The others were November 9 2020 to January 10 2021; January 29 2021 to February 21 2021; May 24 2021 to June 13 2021; and July 12-25 2021.

The Australian Financial Complaints Authority says the first period involved various lockdown orders and the insurer had followed the principle that losses arose from the same “underlying fortuity”, which was the March covid outbreak.

But Hollard presented no evidence of some other factor that resulted in the losses from November 9 onwards.

Given the business interruption losses leading up to October 18 2020 were accepted as connected to the March outbreak, “then it is reasonable to infer that any further outbreaks shortly afterwards were likely connected too”, AFCA’s ruling says.

AFCA has applied the principle to the second and third periods, but says the two final periods are not covered.

The policyholder’s business interruption cover extended for 12 months from the date of loss, which in this case began on March 9 2020.

The fourth and fifth periods fell outside the indemnity period, and the renewed policy would not respond because of the Biosecurity Act infectious disease exclusion.

The complainant also argued its broker did not provide the 2020 policy wording and was the insurer’s agent.

“I disagree. There is no information to show the broker was acting under a binder. Instead, the exchanged information shows the broker was acting on behalf of the complainant,” an AFCA ombudsman said.

An application for legal costs was rejected, but the insurer has been ordered to pay interest on the initial sum from July 30 2021 to December 13 2024. For any outstanding amount resulting from the decision, interest is payable from July 30 2021.

See the decision here.