The pandemic exclusion in insurance policies

The COVID-19 pandemic has already caused significant loss of human life, with experts predicting that it could be up to 18 months before we’re through the worst of it.

In the meantime, precautions and prohibitions from the Australian government regarding social distancing, self-isolation and travel will have unpredictable impacts on our daily lives. Many businesses are already starting to feel the pressure – reduced work, sick staff, decreased supplies and disappearing customers. There will be difficult economic times ahead.

If you’re worried about the impact on your business or financial situation, and you’re unsure on how various existing insurance policies can help, we’ve answered the three most common scenarios.

Small business owners

I’m worried that the COVID-19 pandemic will impact my small business, cash flow, and staff. Will my business interruption insurance cover me in this circumstance?

Potentially. The best thing to do is check the fine print on your policy as soon as possible.

Most insurance policies that provide business interruption insurance will specify circumstances in which you are not covered. Unfortunately, this usually includes an exclusion against claims which are caused by an event that the World Health Organisation has declared a pandemic, such as COVID-19.

Dig out your policy and read it carefully, paying particular attention to the exclusions that apply to that policy. Contact your insurance broker or the insurance company directly for clarification on anything you’re not sure about.

If you are not covered by your insurance policy, 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.

You should also keep up to date with both state and federal government guidelines about the pandemic, including any business assistance measures or stimulus packages. There may be grants, subsidies or tax breaks available to you that can ease the pressure on your business.   

If your insurance does cover you, read our 101 guide on making an insurance claim

I have a lease on my car/business equipment/ business premises and am worried I won’t be able to make regular payments if my employment changes. My lease has disability insurance - will it cover me?  

Again, it depends on your policy, and any exclusions it has.

As with other insurance policies, most will contain clauses that exclude cover if there is a pandemic. However this does differ between providers and between insurance products.

You need to check your policy and any exclusions that apply. You should contact your insurance broker or the insurance company directly for clarification if you are not sure.

If you think you should be covered, and your insurer has rejected your claim, read our guide. We step through your options if an insurer is behaving badly. 

If you are not covered, then you should check the leaser’s website and see if there is any lease payment relief provided or alternatively call them.


Will my mortgage insurance cover me if I am unable to maintain regular payments because of the pandemic?

Around one third of Australians have insecure work, so we understand that many people are stressed about the impact of the pandemic on cash flow.

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 a pandemic (such as COVID-19).

Most mortgage protection insurance cover will contain an exclusion against claims which are caused by an event that the World Health Organisation 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 package 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 also available.

Keep updated

As times change, our advice to individuals unsure of their insurance, financial or employment status should:

  • Monitor government websites daily for information that may help you.
  • Check the economic relief packages announced by the government to see if you are eligible for any payments that may assist you.
  • Check your financial provider’s website regularly for updates and guidance. Apply the current social distancing requirements as requested by the authorities while your business is operating and comply with any new requirements that are issued in the future.
  • Ask your employer what will happen to your pay should the business you work for have to close down for a period and you can’t work from home.

This is a fast moving and unprecedented situation that will impact many parts of our society and economy.

If you need to seek legal advice, contact our team. We can review your policy for free and let you know what you are entitled to.

Most importantly, we hope you and your loved ones stay safe.

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Josh Mennen

Maurice Blackburn Brisbane

Josh Mennen is a Principal Lawyer in the Superannuation and Insurance practice in Maurice Blackburn's Brisbane office. He regularly visits Melbourne, Sydney and Adelaide

He has practiced predominantly across superannuation, insurance, financial advice and consumer credit disputes.

Admitted to practice in 2007, Josh has helped hundreds of people access justice. With an extensive knowledge of the legal process he has been responsible for law-changing, leading cases in a range of State and Federal jurisdictions. 

He is a prominent commentator on policy reform, …

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