We have prepared some information below to cover some of the more common frequently asked questions about insurance and the COVID-19 pandemic. However, every policy can be different and you may need to speak directly with us to clarify your insurance position if you have been affected.
We have included product information sheets to download. This information is provided to assist you in understanding the terms, implications and common considerations in business insurance. The info sheets are general in nature.
This will depend on the conditions of your property policy. Generally most business package policies include a clause which extends cover to include property while it is temporarily removed from your usual Premises. Cover is generally limited to 20% of your normal sums insured and is provided under the same terms and conditions as if it were at your usual premises. For example if you do not currently insure for “burglary” there will be no cover burglary whilst temporarily removed to an employees premises.
Cover is generally limited to a maximum of 90 days, however in view of the current circumstances we understand that many insurers are currently considering this position, and may look to amend the cover to include a temporary working from home provisions, without the 90 day limit.
Some policies will automatically cover this risk and in other cases you will need a ‘General Property’ or ‘Transit’ coverage. Generally motor insurance only provides a small benefit for items lost / damaged in a vehicle.
The property of the employee will not usually be covered by your business insurance, and any home and contents insurance the employee has in place will be unlikely to cover your business equipment.
Traditionally, business interruption policies only cover disruption to a business as a result of damage to ‘insured property’. However, over time, insurers widened the protection to provide coverage as a result of a closure of the business by a public authority for a number of risks including infectious disease. This was designed to cover things such as an outbreak of Legionnaires disease, or a measles outbreak which closes down one or two buildings disrupting a small number of businesses. Notwithstanding this some policies provide coverage for an outbreak up to 50 kilometres from the business location, but most only cover at or near the premises insured.
While there may be exceptions where a specialist business has secured very specialist global insurance, the cover afforded by both business packs and standard Industry Special Risks policies are not intended to cover disruption caused by an outbreak in a different state let alone a different country. The outbreak of the SARS (Severe Acute Respiratory Syndrome) in 2013, prompted insurers and reinsurers to do modelling as to just how large claims could amount to in the event of a major pandemic such as the Spanish Flu which lasted from January 1918 – December 1920 and resulted in the death of anywhere between 40 and 100 million people. The reality is that the global funds held by insurers could not meet business interruption claims arising from such a large-scale pandemic. We would have no insurance industry to protect against the traditional insured perils.
Not wishing to strip away the coverage that was being offered for localised infectious disease outbreaks insurers, prompted by reinsurers, added an exclusion to their policies stating that disruption from a number of highly effective diseases were not covered. As such, diseases can arise at any time and originate from new sources, the insurance industry introduced a clause which excludes any disease that is notifiable under the Quarantine Act 1908 (Cth) which has been updated by many insurers in line with changes in legislation to the Biosecurity Act 2015 (Cth).
As of the end of January 2020, Coronavirus is a listed disease and so all, but a few, policies exclusions will take effect. This means that regrettably there is no insurance protection for disruptions to business arising from Coronavirus.
Download our Business Interruption Info Sheet.
Since Coronavirus has become a listed disease by the Australian Government any requests for leisure travel insurance since the end of January are likely to have a blanket exclusion for any losses arising from the disease.
There are several types of travel insurance policies in the Australian market and like many classes of insurance they vary considerably. There are two broad categories of travel insurance covered below.
These policies are designed to cover you for a particular trip. Some policies have a blanket exclusion for pandemics others do provide coverage where the travel warning issued by the Australian government reaches a certain level eg. ‘Level 4 – Do Not Travel’.
Unlike leisure travel these policies are designed to cover all travel during the period of insurance. Quality corporate travel insurance policies that were taken out or renewed before Coronavirus became a listed disease under the Biosecurity Act 2015 are likely to provide coverage for cancellation of trips to countries that are at Level 4 – Do Not Travel.
Again, a decision not to travel, where the travel warning level is not at the trigger level stated in your corporate travel policy, will not under normal circumstances activate the insurance coverage.
Now that Coronavirus has reached the listed disease level, most insurers are placing a specific exclusion for losses occasioned by or happening through Coronavirus. This may be lifted once the disease is brought under control but only time will tell.
Subject to terms, conditions and exclusions of the policy, there is a strong position that the policy would respond.
Landlords insurance has optional coverage for Loss of Rental and for Rent Default.
A tenant might Default on the rent due under the rental agreement for a number of reasons, it is important that Property Managers follow the appropriate steps when this occurs - such as issuing arrears notices.
The Loss of Rental coverage applies after an insured event (damage), and in the event of a Tenant not paying rent relating to COVID-19 there is no insured event that has occurred, so the insurance protection does not respond.
Rent Default is an optional coverage and the risk of a tenant default is often mitigated by the engagement of a professional property manager / real estate firm. Rent default may be covered if the rental default is found to be the result of financial hardship under the standard process.