Small business sues insurer lockdown losses

The owner of a Jetts gym in Victoria has taken his insurer to the Federal Court after he was denied compensation for lost revenue caused by the forced closure of businesses during the pandemic. 

Christopher Blake estimates his gym would have generated at least $235,000 were it not for the two state-wide lockdowns last year. 

The Bellarine Peninsula man had business interruption insurance, which is supposed to provide lump sum payments capped at $450,000 when events beyond human control affect operations. 

But his claim was denied by Hollard Insurance, which said coronavirus was excluded under its policy as it was a quarantinable disease as defined by the Quarantine Act 1908. 

The problem is that legislation had been replaced with the Biosecurity Act 2015, meaning Mr Blake’s policy cited a redundant law. 

In December, five NSW Court of Appeal judges unanimously ruled it was wrong to deny business interruption pay-outs on this basis – a decision the Insurance Council of Australia intends to challenge in the High Court. 

Joseph Crane, a Senior Commercial Disputes Solicitor at Shine Lawyers, said the NSW Court of Appeal decision opened the floodgates to claims from small businesses, particularly in Victoria. 

“Victorian small businesses paying tens of thousands of dollars for interruption insurance each year rightly expect to be treated fairly when they claim financial assistance in accordance with their policies,” Mr Crane said. 

“Insurance companies instead tried to crab-walk away from the wording of their policies, but the NSW Court of Appeal saw right through those attempts and we’re confident the High Court will reach the same conclusion.” 

Mr Crane said while Victoria’s two lockdowns were necessary to address a public health emergency, the impact on thousands of small businesses was devastating. 

“The financial and emotional strain on small business owners in Victoria can’t be underestimated and insurers need to pay up now rather than drag this through the courts any longer,” he said. 

“We warned of impending claims following the NSW Court of Appeal decision and what we’re seeing now is Victorian small business owners like Christopher Blake fighting back.” 

If you own or operate a business forced to close due to a COVID-19 lockdown and your insurer rejected your business interruption claim, Shine Lawyers may be able to help.

Complete our free claim checker to determine whether we can assist you claim back losses caused by COVID-19 from your insurer. Alternatively, you can phone us on 1800 751 712.