Insurance and the pandemic
The shutdowns associated with the global pandemic are causing huge disruptions for businesses.
If you haven’t already, now is the time to look at your insurance policies to see what you are covered for.
Most business insurance policies have a business interruption clause.
This means that if you have to stop trading due to damage to or loss of property, you might be covered for loss of income or business expenses up to a certain amount.
However, unless your policy has a special clause, it’s unlikely it will cover you for having to cease trading due to the pandemic.
A special clause might include outbreaks of infectious disease – but ordinarily this would only apply to localised events such as legionnaires disease or measles, and coverage would be limited to a certain radius from the outbreak.
Some policies may cover you if your business is forced to close by a government authority.
If you have specialist cover for disruption to critical supplies from overseas or a sudden drop-off of trade due to border closures, you may also be able to make a claim.
Unfortunately, however, most policies in Australia will contain exclusions relating to the pandemic.
The Insurance Council of Australia website has more information about the implications of the pandemic for business interruption insurance.
Regardless, you should talk to your insurer or your broker to find out more about what you’re covered for.
It’s always worth checking, especially for things relating to your premises, such as additional costs of sanitising your premises or equipment.
If you wish to dispute a decision by your insurer, you can make a complaint to the Australian Financial Complaints Authority (AFCA)
AFCA is an independent body that can assist with complaints resolution and award compensation.
In Victoria, WorkSafe Victoria covers medical costs to treat immediate injuries and illnesses for workers.
This may include covid-19, but you would have to establish that the disease was contracted in, or caused by, a particular employment.
WorkSafe may be able to support workers who are required to self-isolate.
If you are moving your business to working from home, you should be aware that you still have duties to your staff under the Occupational Health and Safety Act 2004.
This means you must provide a safe working environment. For their part, your staff must take reasonable care for their own health and safety.
The WorkSafe website has more information.
The Insurance Council of Australia states that there are no exclusions relating to Covid-19 that would prevent policies from paying out in the event of a death related to the virus, as long as you have followed government travel advice and have not intentionally exposed yourself to risk of sickness.
Healthcare industry super fund HESTA has clarified that a pandemic exclusion clause in its life insurance policies underwritten by AIA Australia will not be invoked.
Income protection insurance
It’s unlikely you’ll be able to claim income protection insurance if you’re unable to work because you’re self-isolating or in quarantine.
Income protection usually only kicks in after 30 or 90 days, depending on the length of the waiting period you’ve chosen, so it’s generally only for a long-term illness or total and permanent disability.
If you contract covid-19 and have complications that mean you can’t work for more than 30 days, you may be able to make a claim.
Mortgage protection insurance
Mortgage protection insurance will cover your mortgage payments if you die, are totally and permanently disabled, or diagnosed with a critical illness.
Again, it is unlikely insurers will pay out unless you pass away or become totally and permanently disabled as a result of covid-19.
If you don’t have mortgage protection insurance, it may be worth considering at this time, but check the wording of the policy carefully so you know what exclusions there are.
Redundancy insurance provides short-term financial assistance if you involuntarily lose your job. It covers a portion of your pre-redundancy income while you are unemployed.
It generally won’t cover you if you opt to take a package or choose to resign.
If you don’t have redundancy insurance, it may be worth considering at this time, but check the wording of the policy carefully so you know what exclusions there are.
If you own and rent out a property, you may have landlord insurance.
Landlord insurance typically covers:
- theft or burglary by tenants, their guests or others
- malicious damage or vandalism by tenant or their guests
- loss of rent due to tenant default or breaking the lease
- loss of rent after an insured event that causes the property to become unliveable
- legal expenses related to evicting a tenant.
On Sunday 29 March, Commonwealth and state governments agreed to a six-month moratorium on evictions.
This means landlords need to work with their tenants, banks and insurers to find solutions if the tenant is no longer able to pay their rent.
For example, you may be able to offer your tenant a rent reduction, and claim the difference through your insurance.
Private health insurance
Australian citizens and permanent residents do not need private health insurance to access care, as covid-19 treatment will be covered by Medicare.
If you already have private health insurance, check to ensure it includes lung and chest treatment, non-emergency ambulance cover, and if you nearest private hospital has a contract with your health fund.
If your current policy does not cover this, you can switch to a new policy and have the waiting period waived.
Most travel insurance policies have exclusions for pandemics and many also exclude government travel warnings.
However, don’t assume you’re not covered.
Once you’ve negotiated any refunds that may be available on cancelling your plans, speak to your insurer about any residual loss.
You have a right to lodge a claim, and your insurer must explain why it cannot be paid.
Even if you don’t think you’re covered, it’s still worth contacting your broker or insurer to find out how they might be able to help.
Although the pandemic has been declared an insurance catastrophe by the Insurance Council of Australia, National Insurance Brokers Association President Eric Harris is urging insurers to do their bit to ensure small businesses survive the crisis.