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Loss caused by Covid-19 not covered

Hine arranged business interruption insurance for her mini-golf business. When the Director-General of Health closed all premises due to COVID-19 effective from 25 March 2020, Hine thought that her business interruption insurance would cover her lost revenue and submitted an insurance claim.

Hine was shocked when her insurance claim was declined and complained to FSCL.



Hine’s insurer referred to an exclusion in the policy for loss connected to a notifiable infectious disease under the Health Act 1956 and any subsequent amending legislation. The insurer pointed to the inclusion of COVID-19 as a notifiable infectious disease in Schedule 1 of the Health Act on 28 January 2020. The insurer said that Hine’s loss was connected to Covid-19 and that they were entitled to decline the claim.

Hine did not agree. Hine said that, when she purchased the policy in August 2019, COVID-19 was not listed as a notifiable infectious disease and that the insurer was obliged to apply the law as it was when she purchased the policy.



We explained that because the policy exclusion clause extended to any subsequent amending legislation and because the government had amended the legislation in January 2020, before the Director-General closed her mini-golf and before she lodged her claim, the insurer was entitled to decline the claim.



Hine was disappointed with the outcome but agreed to discontinue her complaint.


Insights for consumers

Insurance is all about risk. When you purchase an insurance policy, you are paying your insurer to accept some of the risk for adverse events that may affect you running your business. However, the insurer is entitled to limit the extent of the risk they are prepared to cover, and, for example, the insurer can exclude cover for loss arising from business interruption connected with a notifiable infectious disease.

Your relationship with your insurer is based on the insurance policy, this is the contract between you and your insurer. Where the policy wording is clear, we will apply that wording to the circumstances of the case.

In this case, Hine’s loss fell squarely within a policy exclusion allowing the insurer to decline the claim.