An important update on Australian COVID-19 related business interruption claims for Zurich customers

25 June 2021

The High Court of Australia has refused special leave to insurers to appeal the judgment of the NSW Court of Appeal in HDI Global Specialty SE v Wonkana No. 3 Pty Ltd [2020] NSWCA 296 (the First Test Case).  This case concerns the interpretation of business interruption cover for claims made in the context of COVID-19 and the application of an exclusion which contains a reference to ‘quarantinable diseases’ under the Quarantine Act 1908 (Cth).

Insurers made an application to the High Court for special leave to appeal the Court of Appeal’s judgment and this application has today been refused. This means that the Court of Appeal’s judgment in HDI v Wonkana will stand.  As a consequence, references in business interruption policies of insurance to ‘quarantinable diseases’ under the Quarantine Act cannot be read as including COVID-19.

Separately, proceedings were commenced in the Federal Court of Australia in February 2021 under AFCA’s Rules to obtain legal precedents on other significant issues of policy interpretation for COVID-19 related business interruption claims (the Second Test Case). These matters will be heard by the Federal Court in late August 2021. The Second Test Case will determine the meaning of policy wordings in relation to the definition of a disease, proximity of an outbreak to a business, and prevention of access to premises due to a government mandate, as well as policies that contain a hybrid of these type of wordings.

Some Zurich policyholders will be impacted by the decision of the High Court to refuse special leave to appeal in the First Test Case alone, but most will be impacted by the outcome of the Second Test Case.  As a consequence, claims made for COVID-19 related business interruption loss by Zurich policyholders may not be able to be immediately finalised following the High Court’s decision but will require the legal precedents provided by the Second Test Case in order to determine whether cover is available for the claim.  Zurich will await the final outcome and will follow the legal precedents of the Second Test Case before it is able to finalise such claims.

Zurich remains committed to supporting our customers through this important legal process.

Accordingly, we will be reaching out to policyholders who have already lodged a claim with us to provide an update on how this decision will impact their claim. Customers should expect an update from us within 10 working days through their Broker.

If you have any questions about Business Interruption cover for COVID-19 related losses, you can visit the Insurance Council of Australia website: or contact your Broker or Zurich Insurance for further information.

If you wish to lodge a claim please click here or contact your Broker.

11th October 2021 update

For information about the Second Test Case ruling, please click here.