Delay to Covid-19 insurance claims could be costly for policyholders

Some business interruption insurance policyholders may be running out of time to make a claim, with many policies allowing for only 30 days.

some small business customers say they experienced pushback from brokers when they tried to make claims against their policies in the early days of the pandemic. Picture: AFP

Some business interruption insurance policyholders may be running out of time to make a claim, with many policies allowing for only 30 days.

This comes as some small business customers say they experienced pushback from brokers when they tried to make claims against their policies in the early days of the pandemic.

Maurice Blackburn Lawyers principal lawyer Josh Mennen said some brokers were “actively discouraging customers from submitting claims” and were acting in the interests of the industry, suggesting claims were never meant to be covered.

“It seems pretty clear that this behaviour is driven in part by an allegiance that brokers feel towards insurers,” he said.

“My client … asked their broker about making a claim during the early stages of the pandemic and were discouraged from doing so, initially on the basis that they were not covered and the claim would be denied.”

Mr Mennen said his client bought policies through Everest Risk Group — a corporate authorised representative of Insurance Advisernet.

In the first email to their broker in March the customer was reportedly told “the business interruption losses from these sorts of events could never be met by funds held by insurers; it would result in the collapse of the insurance system worldwide”.

Mr Mennen said it was concerning that the broker had ­pushed back on the customer’s wish to make a claim given “an insurer can rely on that (delay) to decline a claim”.

“It’s a dangerous game to be playing for a broker to be deterring a claim being made out of some sort of paternalistic desire to protect their clients from getting their hopes up or having their hopes dashed.”

Insurance Advisernet managing director Shaun Standfield told The Australian: “In March 2020, the policy coverage position on COVID-19 related Business Interruption claims was more certain as industry-wide policy wordings contained specific pandemic restrictions.

“Since that time the coverage position has become less clear, and as you are aware, the insurance industry worldwide is debating the issue of whether government closures of businesses resulting from COVID-19 may trigger a business interruption claim.

“In the meantime, Insurance Advisernet brokers/advisers have lodged many COVID-19-related business interruption claims on behalf of clients.”