Coronavirus and important insurance questions
2nd Apr 2020
Common questions asked by travellers at the moment is whether their travel insurance is affected by the coronavirus (COVID-19) and whether they will still be able to claim for any losses.
COVID-19 has thrown into doubt many travel plans since the World Health Organisation (WHO) declared it a global public health emergency.
In some instances, travel insurance may be able to help travellers meet some of the extra costs incurred when cancelling or changing plans because of COVID-19.
Here are some tips for responding to common queries you may be asked by your clients:
I booked a trip to an area before COVID-19 travel bans were put in place. What should I do?
- The first step is to contact the travel and/or transport companies through which you booked your holiday and check what the cancellation policy is that applies to your contract. It may provide for a refund or the issue of a credit to you.
- Check the websites of the travel and/or transport companies for announcements regarding COVID-19-impacted travel.
- If a travel or transport company refuses to provide a refund or credit for a cancellation, then you must get confirmation of that in writing from the company in order to demonstrate your financial loss.
- Lodge a travel insurance claim for the costs of the cancelled trip with your travel insurer.
- Some insurers have only put in place exclusion clauses for COVID-19-affected claims since January 2020, so your coverage may be unaffected.
- Other insurers don’t offer any coverage for pandemics, epidemics or other infectious disease outbreaks if a customer’s insurance was issued after an alert or warning about an outbreak. However, you still may have cover if there were no alerts or warnings in place depending on the terms of the particular policy.
- If your travel insurance claim is rejected, seek an internal review of the decision. If that’s not successful, consider lodging a complaint to the Australian Financial Complaints Authority (AFCA).
I booked a trip to an area that wasn’t affected by COVID-19, but I now have to cancel my trip due to the a Level 4 ban on travel issued by the Australian Government. What should I do?
- You should contact the travel and transport companies through which you booked your holiday and check what the cancellation policy is and whether they have made any announcements on their websites in light of this announcement.
- Carefully check what your travel insurance policy covers. Some policies will cover the cost of cancelled trips in certain circumstances, some will cover the cost if a travel company becomes insolvent, and some will cover the cost of alternative travel arrangements.
- Check your policy for any types of events that are excluded from insurance coverage. Some policies exclude cover if the WHO declares the outbreak of an epidemic or pandemic such as COVID-19, while others expand that exclusion to include ‘the threat of’ an epidemic or pandemic. If this is the case, you may have difficulty in making a claim.
- If you are not sure of the terms of your insurance, you should contact your insurer for advice or obtain legal advice so that you know where you stand.
Business insurance cover
I run a small business and am worried that the impact of the COVID-19 pandemic will impact my business, cash flow, and staff. Will my business interruption insurance cover me if this happens?
Most insurance policies that provide business interruption insurance will specify circumstances in which you are not covered. This usually includes an exclusion against claims which are caused by an event that the WHO has declared a pandemic, such as COVID-19.
You need to check your policy, in particular the exclusions that apply to that policy. You should contact your insurance broker or the insurance company directly for clarification if you are unsure.
If you are not covered by your insurance policy, you will need to seek advice from your bank or financial advisor to develop a plan in the event that your business operations cease or are disrupted by the pandemic. Information is available on various financial institution websites.
Importantly, you should ensure that you keep up to date with government guidelines about the pandemic, including the government’s business assistance measures.
I have a mortgage to pay and want to know if my mortgage insurance will cover me if I am unable to maintain the regular payments of my mortgage because of COVID-19.
Mortgage insurance, also known as home loan insurance or consumer credit insurance, is a product that protects the borrower from the risk of default. You need to check your policy to see if it covers your particular circumstances, such as loss of employment or medical incapacity due to COVID-19.
Most mortgage protection insurance cover will contain an exclusion against claims which are caused by an event that the WHO declares a pandemic, such as COVID-19.
You should contact your insurance broker or the insurance company directly for clarification if you’re unsure.
If you are not covered by your mortgage insurance, you should check your financial provider/ institution’s website immediately to check if mortgage relief will be provided and in what circumstances.
The government’s stimulus payment may assist you to keep up with your repayments.
Information about requesting a change to the terms of a loan due to financial hardship caused by COVID-19 is available here.
Disability cover under insurance policies
I have a lease on my car/business equipment/business premises. I am worried what will happen if I am unable to maintain regular payments on my leases because of the pandemic. I have disability insurance on my lease and want to know if it will cover me in the current circumstances.
Most insurance policies that provide business interruption insurance will provide circumstances in which you are not covered. In most insurance policies there will be an exclusion in the event that the WHO declares a pandemic, as it has done with COVID-19.
You need to check your policy and the exclusions that apply to the policy. You should contact your insurance broker or the insurance company directly for clarification if you are not sure.
If you are not covered, then you should check the lessor’s website and see if there is any lease payment relief provided or alternatively call them.
This is a fast-moving and unprecedented situation that will impact many parts of our society and economy. As a practitioner, it is prudent to be regularly checking different sources of information in order to be best placed to assist clients during this extremely difficult period:
- Monitor government websites daily for information that may help you and your clients to navigate situations involving insurance.
- Check the economic relief packages announced by the government to see if your client is eligible for any payments that may assist them.
- Check in with your client, and check their financial provider’s website regularly for updates and guidance.
- Recommend that your client apply the current social distancing requirements as requested by the authorities while their business is operating and comply with any new requirements that are issued in the future.
- Recommend that your client ask their employer what will happen to their pay should the business they work for have to close down for a period and they are unable to can’t work from home.
- Review your firm’s website and ensure it contains relevant and up-to-date information for your clients.
Kim Shaw is the Division Head of the Personal Legal Services Division at Maurice Blackburn Lawyers, managing the largest superannuation and insurance practice in Australia as well as the financial advice disputes, and wills and estates practices. She is Director on the Maurice Blackburn Board and was named Lawyer's Weekly Partner of the Year for Insurance Law in 2018.
Kim joined Maurice Blackburn in 1991 after completing articles and remains a proud member of the firm, becoming a Principal in July 1999. She is passionate about achieving fair outcomes for those who have suffered injury or illness and is energised by the opportunity to lead and coach a talented team of lawyers and legal staff to provide the best advice to clients, often during times of extreme health, social, work and family disruption, to achieve the best of client outcomes.
The views and opinions expressed in these articles are the authors' and do not necessarily represent the views and opinions of the Australian Lawyers Alliance (ALA).