COVID-19 EDITION 2: INSURANCE CLAIMS

April 7, 2020

The cases of coronavirus (COVID-19) are increasing, as at 6am on 7 April 2020, there have been 5,844 confirmed cases of COVID-19 In Australia, of which 2,686 are from New South Wales and 1,158 from Victoria. Victorian Premier Daniel Andrews has declared Victoria a State of Emergency, which will last from 16 March 2020 until midnight on 13 April 2020 to combat the virus. With new and more enforced restrictions in place, it is the hope that the numbers will start increasing at a decreasing rate*.

This pandemic has affected everyone in one way or another. For some, it is the disruption of travel plans, cancellation of a major event, medical claims and for others, the disruption or loss of business. Insurance companies are the busiest now, with high call volumes and customers seeking to establish whether they are insured for different events caused by the COVID-19 pandemic. Unfortunately, many customers may not end the call pleased.

For new customers, travel insurers have issued warnings, that if they purchase a policy after a certain date, this policy will not protect them from any pandemic. Therefore, for new or existing customers who wish to renew their policy, it is important to read through the fine print, instead of blindly signing the policy.

Other customers may have bought their policies before a certain date, such as 23 January 2020 (when WHO first issued its travel warning about China). They may be covered but should check whether their policies include such pandemics.

For companies who have insurance for business disruptions, most may only have coverage for quantifiable physical losses. With companies seeing business slowdown and incurring a loss of revenue, there may nonetheless be no physical damage to the companies and thus no claim for disruptions can be made.

While it might seem unfair that insurers are not covering for such pandemics, they have learnt their lessons from previous health pandemics, such the 2003 Severe Acute Respiratory Syndrome (SARS) outbreak. They have tightened their policies and have added in communicable disease as an exclusion in their policies. Many travel policies specifically exclude losses caused by epidemics, so unless customers took out additional covers, they will not be able to claim for a disruption of travel plans. Therefore, it is necessary to look through your insurance policies, be it travel, health or company and be aware of the risks and protections provided.

*For more information from the Victorian Government on the ‘Stay at Home’ and ‘Restricted activities’ directions, please go to: https://www.dhhs.vic.gov.au/coronavirus-stay-home-and-restricted-activities-directions-faq

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