Client Update - COVID-19 Business Interruption Losses

COVID-19 Business Interruption Losses and Recent Court Decision

19 November 2020

Businesses around the world have faced significant disruption from COVID-19. One area of focus has been the adverse impact COVID-19 is having on business revenues and the role Business Interruption Insurance cover may play.

Test Case decision 


Recently a test case to consider the application of an infectious disease exclusion was filed in the Supreme Court of New South Wales (Test Case). 

The Test Case relates to certain Australian insurance policies which refer to the “Quarantine Act and subsequent amendments”.

The test case process was endorsed by the Australian Financial Complaints Authority (AFCA) and the Insurance Council of Australia (ICA). AFCA also agreed to follow the reasoning of any final judgment in the Test Case when determining complaints before it in respect of business interruption claims with a similar infectious disease exclusion.

On 18 November 2020 the Court of Appeal delivered its judgment and found in favour of policyholders.  The outcome of the Decision (subject to any appeal which may or may not proceed) is that insurers will not be able to rely on the most common Quarantine Act exclusions.

This does not mean that policyholders, affected by the Judgment, are automatically entitled to indemnity under their policy.

What does this mean? 


The Decision means that if you held business interruption cover (over the relevant period) with a Quarantine Act exclusion in the terms considered by the Court and your business has suffered a loss as a result of COVID-19, you may wish to submit a claim with your insurer.  You should seek external legal advice as appropriate to determine if you have a valid claim.  

If you have already lodged a BI claim which has been denied, you may be entitled to challenge the insurer’s decision.

Whether your business interruption claim will be covered under your policy will depend on the precise terms of your insurance cover and the circumstances and nature of the loss which you claim.

Help from Aon 


Aon is currently in discussions with relevant insurers to agree on an efficient and consumer focused method of claims-lodgement for Aon clients given the potentially high volume of claims notifications.

We will very shortly provide a further update with details on how to most efficiently lodge a COVID-19 related BI claim with your insurer.

If you have already lodged a BI claim and wish to challenge the insurer’s decision following the outcome of the Australian Test Case, please contact your Aon broker or claims consultant who will assist you with this process.

Aon will be providing regular updates on this evolving issue in Aon newsroom

Aon remains committed to supporting its clients through the COVID-19 pandemic. 

Disclaimer: This Alert is not intended to be taken as personal advice and should not be relied upon as such. It is not intended to be comprehensive, nor does it, or should it be construed as constituting legal advice. You should seek independent legal or other professional advice before acting or relying on any of the content of this information. Aon will not be responsible for any loss, damage, cost or expense you or anyone else incurs in reliance on or use of any information contained in this Alert.
© 2020 Aon Risk Services Australia Limited ABN 17 000 434 720 AFSL No. 241141 (Aon)

Contact Us

For further information please contact:


Aon Claims Team 
1800 795 019
[email protected]

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