A court ruling has found that many insurance policies did not cover financial losses during COVID.
The rise of business interruption insurance has raised concerns about how it is handled during a crisis.
Around 250,000 policies in Australia were affected by the H1N1 pandemic.
The test case looked at what terms a business could claim during a pandemic, and how close it was to claiming a case of the virus.
The Court’s narrow interpretation of the law means that a claim under similar policies must show a connection between an outbreak of COVID and the government’s restrictions on trade.
Under the law, businesses cannot be compensated if they can only prove that their losses were caused by the government’s closure of international borders.
This will make it difficult for many businesses to claim insurance, especially those that rely on tourism.
Victoria’s small businesses have been hit hard by the impact of the A$1.3 billion payout.
The court ruled that the insurance industry did not have to follow the same rules when it comes to re-writing policies.
The ruling also stated that businesses could reduce the size of their insurance payouts if they took on government subsidies.
The council said the decision supported the insurers’ arguments on eight of the nine issues presented during the test case.
The court’s decision to reject the appeal provided an important step towards settling the various issues surrounding the tax avoidance scheme.
Insurers are committed to following the principles of the court’s final ruling in all business interruption claims.
A pair of class actions have been lodged against QBE and Lloyds over their refusal to pay out business insurance policies to small businesses.
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