Insurance setback

INSURANCE companies have won a crucial test case on COVID-19 payouts, after a Federal Court of Australia ruling found a range of insurance policies did not cover financial losses caused by the pandemic.

The Court ruling means insurance companies may potentially avoid paying out billions, after it was found the majority of nine business interruption policies would not need to be paid out.

The narrower interpretation meant a business needed an actual case of coronavirus within its walls or in its proximity to make a claim, rather than ruling that a government lockdown order was sufficient.

This means a business cannot be compensated if it can only prove its losses were due to a government lockdown or a general economic downturn caused by the closure of borders that prevented travel.