We're sorry but your browser is not supported by Marsh.com.au

For the best experience, please upgrade to a supported browser:


Research & Briefings

COVID-19 Australian Business Interruption Test Case Ruling


What the Australian Test Case Ruling Means for Business Interruption Claims 

In a unanimous recent decision favouring policyholders, the NSW Court of Appeal held against insurers who had sought to rely on an exclusion clause to an infectious disease extension in a Business Interruption policy to argue loss caused by business interruption due to COVID-19 was not covered. 

The terms of the policies contained an infectious disease extension which covered BI losses but with a specific exclusion for ‘diseases declared to be quarantinable diseases under the Quarantine Act 1908 and subsequent amendments’. The Court of Appeal held that this exclusion did not exclude listed human diseases under the Biosecurity Act 2015 (Clth).

The outcome of the decision means that businesses holding policies which were not updated when the Quarantine Act was repealed in 2015 and replaced by the Biosecurity Act now have one less hurdle to overcome when presenting their claim. 

Other relevant factors, such as whether the outbreak of the disease, government action and/or the downturn in the economy caused the loss will still need to be carefully considered and evaluated as part of a claim submission. However, many of these issues were largely resolved also in favour of policyholders in the recently decided UK FCA test case (which is currently under appeal).

To unpack what this means for Australian policy holders and what organisations can do if they have a business interruption claim, Timothy Scott Young, National Manager of Claims Operations and Luke Stratford, Head of Claims Solutions for Marsh Pacific recently hosted an informative webinar alongside special guest presenter Mark Darwin, Partner at international law firm, Herbert Smith Freehills.

The presenters discussed:

  • The implications of the judgement in the Australian test case around the exclusion for infectious disease and the impact on BI claims;
  • The possible consequences of the FCA BI test cases and the impact they may have in Australia in relation to prevention of access to business premises by local government order and local COVID-19 outbreaks;
  • Why businesses shouldn't wait to lodge a BI Claim and the benefits of doing it now; and
  • How Marsh can assist in preparing and submitting a claim on behalf of policyholders.

If you’re a current Business Interruption policy holder or may be making a claim, we encourage you to take a moment to watch this insightful webinar recap to explore the implications that the Business Interruption test case may have on your organisation.

Furthermore, if you are approaching the renewal of your Business Interruption Insurance Policy, please refer to our report ‘Managing Business Interruption in a COVID-19 world’ for some practical tips and considerations as you navigate through the renewal process.


If you have any specific questions on the Business Interruption Test Case or would like to make a claim, please contact our Claims team here.

Marsh Pty Ltd (ABN 86 004 651 512, AFSL 238983) (“Marsh”) arrange this insurance and is not the insurer. The Discretionary Trust Arrangement is issued by the Trustee, JLT Group Services Pty Ltd (ABN 26 004 485 214, AFSL 417964) (“JGS”). JGS is part of the Marsh group of companies. Any advice in relation to the Discretionary Trust Arrangement is provided by JLT Risk Solutions Pty Ltd (ABN 69 009 098 864, AFSL 226827) which is a related entity of Marsh. The cover provided by the Discretionary Trust Arrangement is subject to the Trustee’s discretion and/or the relevant policy terms, conditions and exclusions. This website contains general information, does not take into account your individual objectives, financial situation or needs and may not suit your personal circumstances. For full details of the terms, conditions and limitations of the covers and before making any decision about whether to acquire a product, refer to the specific policy wordings and/or Product Disclosure Statements available from JLT Risk Solutions on request. Full information can be found in the JLT Risk Solutions Financial Services Guide.