Insurance News

Opal dealer challenges insurers on business interruption claims rejection

However, the company’s insurer rejected a claim against the BI policy in May, insisting that the business losses (which the Opal dealer estimates to be over $3 million) would need to have occurred as a consequence of COVID-19 cases within 20 kilometres of the premises rather than “overarching factors resulting from the COVID-19 pandemic as a whole,” including international border closures and local lockdowns that limited retail foot traffic.

Cody Opal Australia director Damien Cody said the insurer’s interpretation was “self-serving and convoluted” as the BI component of the company’s insurance policy had no ambiguity and relevant exclusion, according to a Jeweller Magazine report.

Melbourne law firm Berrill & Watson, which represents Cody and manages over 20 other separate BI claims, said many exclusion clauses define a pandemic as an “outbreak of a ‘quarantinable disease’ under the Quarantine Act 1908.”

“Under this Act, the government had the power to put certain things into place, such as close borders, restrict access [to premises], and shut businesses down,” said Berrill & Watson director John Berrill, as reported by Jeweller Magazine. 

However, Berrill pointed out that the government replaced the Quarantine Act with the Biosecurity Act in 2016.

“So, a ‘quarantinable disease under the Quarantine Act’ is no longer how you would describe a pandemic declared by the government – instead it would be a ‘human infectious disease under the Biosecurity Act’,” he continued.

“The problem for many of the insurance companies is that they did not update the wording in the policies, so a lot of exclusion clauses still refer to ‘a quarantinable disease under the Quarantine Act’.”

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