Federal court rules in favor of Australian insures in COVID-19 BI cases

The insurers avoided coughing up an estimated A$10b in payouts.

Australia’s Federal Court has ruled that nine out of 10 business interruption policies put before it for scrutiny would not need to be paid by insurers.

In one matter the court found that the cover had been triggered but held that there were substantial issues as to whether the policyholder could prove any relevant business interruption.

The decision will influence the estimated 250,000 policies that fall in the same category. Potential payout was estimated to be at A$10b ($732b).

In a separate case the Federal Court also ruled that insurers could not rely on a section of Victorian property legislation to exclude liability.

According to Andrew Hall, CEO of the Insurance Council of Australia, the Federal Court decision is an important step in finalising matters regarding COVID-19 BI policies.

“Insurers, including those not directly involved in the court proceedings, are committed to applying the principles of the courts’ final ruling consistently and efficiently to all business interruption claims,”