Coronavirus & Insurance - 12/03/2020


While Australia has been relatively protected from the spread of the novel coronavirus (COVID-19) to date, many businesses have been disrupted due to travel, import and/or export restrictions.


At EBM we believe in being open and transparent about the insurance cover our clients hold. Below we outline common insurance products and the probable impact of COVID-19 on certain covers.


Cover for pandemics


Many factors affect whether a loss would be covered under insurance, including the type of loss, the type of cover, the terms and conditions of specific policies and the policy wording.


General insurance policies typically provide protection against losses stemming from insured events such as fire, burglary or storm. The majority of general insurance policies and products specifically exclude claims relating to loss or damage resulting from outbreaks of infectious diseases, pandemics, epidemics and/or known events that could lead to a claim.


In light of these general exclusions, it is unlikely that most general insurance policies will provide the protection for losses associated with COVID-19.


However, certain insurance policies such as trade credit, liability, workers’ compensation or corporate travel policies may cover coronavirus losses. Please speak with your EBM Account Manager about the specific policies you hold if your business has been affected.


Travel Insurance – Leisure


These policies are designed to cover you for a particular private or leisure trip. When it comes to covering the costs associated with cancellation, some policies have a blanket exclusion for pandemics, others do provide coverage where the travel warning issued by the Australian Government reaches a certain level i.e.  ‘Level 4 – Do Not Travel’.


If you elect not to travel due to a fear of the consequences, but the travel warning has not reached Level 4, then your insurer is unlikely to provide cover for any lost fares, accommodation, etc.


Since COVID-19 has become a listed disease by the Australian Government, any requests for leisure travel insurance since the end of January are likely to have a blanket exclusion for any losses arising from the disease.


Travel Insurance – Corporate


Unlike leisure travel, corporate travel policies are designed to cover all travel during the period of insurance.


Corporate travel insurance policies that were taken out or renewed before COVID-19 became a listed disease under the Biosecurity Act 2015, are likely to provide cover for cancellation of trips to countries where the Department of Foreign Affairs (DFAT) has declared a ‘Level 4 – Do No Travel’ warning.


A decision not to travel, where the DFAT warning is not at the trigger level stated in your normal corporate travel policy will not – under normal circumstances – activate the insurance cover.


Now that COVID-19 has reached the listed disease level, most insurers are placing a specific exclusion on losses occasioned by or happening through the coronavirus outbreak. This may be lifted once the disease is brought under control but only time will tell.


Business Interruption


While there may be exceptions, the cover afforded by both Business Packs and standard Industrial Special Risks policies, is contingent on the interruption resulting from “direct physical loss or damage” to insured property caused by a covered peril, which outbreaks such as COVID-19 are not. In addition, any peril must occur at or within very close proximity to the premises. Cover does not usually extend to disruption caused by an outbreak in a different state, let alone a different country.


COVID-19 is a listed disease and so all, but a few, policy exclusions will take effect. This means that there is likely no insurance protection for disruptions to business arising from coronavirus.


Businesses should also consider their contracts, industrial agreements and / or applicable modern awards prior to imposing any annual leave, sick leave, stand-downs, etc, on workers. If unsure, the business should seek specific legal advice.


Workers’ Compensation


In the event a worker contracts COVID-19 due to their work or within their workplace, a claim for workers’ compensation may be lodged. Similar to other work injuries, to establish an entitlement to compensation, COVID-19 would need to have been ‘contracted in the course of employment’ and meet the requirements of the relevant workers’ compensation legislation.


Questions may arise as to the exact time and place of contraction as it can be difficult to accurately determine. Each claim would need to be considered on its individual merits, specific to the individual circumstances and evidence in relation to the claim.


It seems the most significant workers’ compensation risk for employers is in respect of psychological injuries caused by an overreaction to the risk. There have been examples in the broader community of people overreacting to the risk by harassing members of the community. Employers should be very careful to guard against such risks and ensure that any mitigating steps they take in response to coronavirus are measured and that their employees treat people from at risk countries with respect.


As with all claims, it is important employers provide any required guidance and assistance to the worker. The issue of causation would need to be assessed and investigated by the insurer. It is therefore crucial all employers manage the risk to help mitigate any potential claims.


For specific information regarding Coronavirus and Australian Workplace laws, please refer to the Australian Fairwork Ombudsman website.


Marine Insurance


While some risks may be insurable under specialist policies, Institute Cargo Clauses (A) is the standard coverage for most marine cargo insurance policies. There is no exclusion of epidemic; however, exclusion 4.5 excludes loss, damage or expense caused by delay, even though the delay be caused by a risk insured against. Most standard marine cargo insurance policies will generally require physical loss or damage to the goods so, in the absence of actual physical loss or damage the policy will not respond.


Marine Insurance policies will offer limited support in response to the consequences of COVID-19 impacting cargo in transit. However, to the extent that policy holders have their product held up in the supply chain they will have full cover on goods for all risks of loss or damage to the product that is delayed during the ordinary course of transit.  


Managing risks in the workplace


Currently the advice is that there is no need to be unduly alarmed or to panic, and that while COVID-19 is of concern, according to the Australian Government Department of Health: “…it is important to remember that most people displaying symptoms such as fever, cough, sore throat or tiredness are likely suffering with a cold or other respiratory illness—not coronavirus”.


Both employers and employees have a duty to take reasonable care for their own and others’ health and safety in the workplace. Current advice is that practising good hand and sneeze/cough hygiene is the best defence against most viruses.


To help mitigate the risk, drive operational resiliency and support duty of care for employees, business owners should:

  • closely monitor the medical advice and official reports, such as updates from the Australian Government Department of Health and World Health Organization;
  • review policies and measures for infection control, including educating workers on best-practice;
  • have a fully documented and exercised business continuity management plan in place;
  • provide information and regular updates to workers on any changes to organisational policies or procedures and links to relevant services should they require support;
  • encourage workers to keep the business informed of non-work-related travel plans;
  • update travel rules and arrangements, limiting non-essential business travel;
  • advise workers to self-isolate for 14 days if they have travelled to certain overseas destinations or been in close contact with anyone confirmed to have the coronavirus; and consider or extend flexible working arrangements to reduce the likelihood of the spread of the virus in the workplace or community.


How to stay informed


Everyone should remain alert for updates and advice from the relevant authorities on additional steps to manage the spread of COVID-19.


The following resources, advice and sources can be consulted for regular updates:



Here to help


If you have any questions about insurance cover or workplace risk mitigation, please contact your EBM Account Manager.



LMI Group, Coronavirus and Insurance Paper – Business Interruption

LMI Group, Coronavirus and Insurance Paper - Travel


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