The Full Court of the Federal Court of Australia has recently handed down two appeal decisions that provide further guidance on business interruption insurance policies and whether they cover businesses for COVID-19 related losses.
On 21 February 2022, the Full Court of the Federal Court of Australia handed down two appeal decisions:
- LCA Marrickville Pty Limited v Swiss Re International SE [2022] FCAFC 17; and
- Star Entertainment Group Limited v Chubb Insurance Australia Ltd [2022] FCAFC 16.
The judgements reached in the above cases uphold the first instance judgements, with the exception of one policyholder, which confirmed that there was no insurance coverage available for businesses claiming losses related to COVID-19.
This decision was made on account of the specific policy wordings issued to each of the policyholders that did not allow for businesses to be covered, particularly the wordings used in each insuring clause to determine the circumstances that are required to establish cover.
The Court upheld that the Policyholders’ claims that assert coverage under the 'Hybrid' or 'Prevention of Access' clauses did not succeed on the basis of the known facts, as such clauses “require closure or evacuation of the business “by order” of a relevant authority, which was not the same thing as the order having the consequence that premises were closed” as noted by Derrington & Colvin JJ.
Further, there was discussion within the Court over whether COVID-19 was considered a 'catastrophe' under the ‘Catastrophe’ clause. In both appeal cases, the Full Court upheld that the COVID-19 pandemic was not a 'catastrophe' within the meaning of the insurance policies in question, affirming the first instance interpretation.
These judgements handed down by the Full Court of the Federal Court of Australia provide much needed judicial guidance for businesses who intend to make business interruption claims. From the decisions reached, it is essential to recognise the importance of the specific wordings of the policies issued to individuals as well as the facts of their situation, as these considerations will determine the availability of coverage accessible to them.
If you or someone you know wish to discuss this matter further, then please contact our experienced solicitors at 02 8999 9809 for assistance.