Business Interruption Claims Class Action Investigation

Are you entitled to claim on your business interruption insurance for losses caused by COVID-19?

Frequently Asked Questions

Gordon Legal is currently investigating the potential for business owners to make successful claims on their business interruption insurance policies for COVID-19 related losses to profit and revenue. This investigation is in collaboration with Berrill & Watson, a leading plaintiff superannuation and insurance law firm.

Regrettably, many business owners have had their business interruption insurance claims rejected or have been told by their brokers and insurers that their policies do not cover pandemic related losses, when in fact many policies will provide cover for loss of profits and revenue. It is critical that business owners obtain independent legal advice as many may be entitled to the benefit of their insurance cover and simply not be aware of their entitlements.

Berrill & Watson is a leading plaintiff superannuation and insurance law firm. Gordon Legal is a plaintiff law firm with extensive experience in complex class action litigation and obtaining outstanding outcomes for their clients. Working in collaboration, Berrill & Watson and Gordon Legal offer a breadth of significant experience and knowledge to guide business owners through the insurance claims process.

Many businesses throughout Australia held these policies, which typically included coverage for loss of revenue or profits as a result of outbreaks of disease, or orders by legal authorities restricting access to their premises.

Many businesses have tried to claim on these policies on the basis that this cover extended to loss of revenue or profits suffered as a result of outbreaks of COVID-19 within a certain distance of their premises, or closures ordered by the government which affected their premises.

A number of these policies purported to exclude insurance coverage where the disease in question was defined as a “quarantinable disease” under the Quarantine Act 1908 (Cth). However, this piece of legislation was repealed some years ago and no longer applies, leading to the question of whether the clauses exclude insurance coverage. The Quarantine Act 1908 (Cth) was replaced by the Biosecurity Act 2015 (Cth).

It appears that a number of insurers and brokers have advised businesses that they cannot claim on their business interruption insurance due to these exclusion clauses. However, in a judgment delivered on 18 November 2020 by the Court of Appeal in New South Wales, the court has found that COVID-19 is not a disease declared to be a “quarantinable disease” under the Quarantine Act 1908 (Cth), and therefore that certain exclusion clauses which insurance companies relied on to deny coverage to businesses are ineffective.

A summary of the judgment can be found here.

If you own or operate a business which may have experienced a loss of revenue or profits due to the COVID-19 pandemic, and believe that you may have held business interruption insurance cover during that time, please contact us for a free, no-obligation evaluation of your insurance policy. For more details register here, and we will get in touch as soon as possible.

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What is a Class Action?

A Class or Group Action is a Court procedure which allows people with similar claims against another party to bring their action in one Court Proceeding rather than requiring them to go to the cost (and take the individual risk) of commencing their own claim.

In Australia, the law provides individual Group or Class members the opportunity to Opt Out of the Proceedings if they do not wish to participate or wish to bring their own individual claim.

The benefit of Class or Group Actions is that it means that claims that would otherwise not be economically viable for a person to bring on their own behalf are able to be gathered together so that the costs and risks can be shared among a larger group of people with similar claims.

What are the risks of participating in a Class Action?

The risks of participating in a Class Action are similar to the risks that any person bringing an individual claim would face, except that the risk of having to pay the other party’s legal costs if the claim is unsuccessful only falls on the Representative Plaintiff or Applicant.

It is important to understand that you do not face the individual risk of an adverse costs order unless you agree to become the Representative Plaintiff or Applicant. If that was the case then your lawyer will discuss those risks with you very carefully before you agreed to act as the Representative Plaintiff or Applicant.