Australian law firms have expressed a range of views on whether exclusions within business interruption policies that refer to a repealed act of parliament will hold up.
As reported by insuranceNEWS.com.au, some policies still contain exclusion referring to “quarantinable diseases” under the Quarantine Act 1908, which was repealed and replaced by the Biosecurity Act 2015.
Law firm Clayton Utz says COVID-19 is not excluded by the outdated wording and suggests insurers pay up.
But insuranceNEWS.com.au understands the Insurance Council of Australia’s own legal advice recommends that similar cases suggest the exclusions will stand firm.
And other law firms seem to sympathise with that interpretation.
“As the Biosecurity Act replaces the Quarantine Act, an argument that an exclusion referring to the Quarantine Act does not apply is not likely to succeed,” an article on Piper Alderman’s website says.
Mills Oakley agrees that “the insurer’s intention to exclude cover for such notifiable diseases is clear to the insured, and the effect of the exclusion is the same, regardless of the Act referred to”.
However, it adds that a risk remains that “these exclusion clauses may be successfully challenged by insureds”.
And Colin Biggers & Paisley lines up with Clayton Utz, saying “it is unlikely that exclusions which only refer to the Quarantine Act 1908, will operate to exclude cover or COVID-19 as the Biosecurity Act 2015 is unlikely to qualify as amending legislation”.
A definitive answer will probably not be provided before a long and costly legal process reaches its conclusion – with many predicting it will end in the High Court.
Blog Submission: Peter Sellwood
PALTD InsureRight – Insurance & Risk Management
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