High Court ruling on Business Interruption insurance for pharmacies

High Court ruling on pandemic induced Business Interruption insurance – what pharmacies should be aware of

Pharmacies need to be aware of the latest High Court ruling over legal action regarding claims for business interruption insurance activated by the COVID-19 pandemic.

In November 2020, the NSW Court of Appeal test case ruled that where pandemic exclusion wording references the Quarantine Act 1908 in a business interruption insurance policy, it cannot be used to exclude from cover. However, policies where an exclusion references the Biosecurity Act 2015, this ruling has no affect.

In December 2020, the Insurance Council of Australia (ICA) fought to overturn this judgment by lodging an application to appeal to the High Court of Australia. Following a briefing on Friday 25 June 2021, the High Court announced it ‘will not grant leave to appeal’ meaning the NSW Court of Appeal ruling will remain.

The impact of the High Court decision will see over 250,000 business interruption policies affected and an estimated $10 billion in claims.

Giuseppe Carollo, from Carollo Horton highlights that, “Pharmacies are in a unique position as they were able to trade throughout most of the pandemic with some restrictions, whereas, industries such as hospitality and entertainment had to close down some or all of their operations. It means pharmacies will need to be aware when claiming for business interruption their will be more complexity preparing the claim and having it approved.”

With the ongoing legal proceedings and a second industry test case awaiting a decision later this year, pharmacies who have policies that reference the Quarantine Act will need to wait until issues concerning the interpretation of business interruption policies are resolved before you will know if you’re fully covered.  

Carollo advised, “Pharmacies who want to lodge a claim should discuss this with their insurance broker. The broker is there to guide you through the process and assess your claim against your policy, the circumstances and how your pharmacy traded during the period.”

“We understand this is difficult not having the certainty around these decisions but pharmacies who believe they have a claim for business interruption should start the process with their broker,” said Carollo.

Pharmacies are urged to contact their insurance broker if they need clarity over the recent High Court ruling and how it affects their insurance policies in relation to business interruption from the pandemic.

Contact Carollo Horton today, if you would like to discuss a claim.