Tamworth Austin Tourist Park: Potential pandemic insurance loophole a test case in NSW Court of Appeals

The NSW Court of Appeal has heard evidence about a potential loophole in insurance contracts that still refer to a document that no longer exists that excluded pandemic cover for business interruptions.

Tamworth's Austin Tourist Park is being used as an example of a business that signed a contract that still refers to the Quarantine Act 1908 "and subsequent amendments".

That act was replaced with the Biosecurity Act in 2015, but Clayton Utz lawyers for the caravan park owners Mark Waller and Chris Erfurt argued that because the contract refers to diseases listed in an act that has been repealed, the client could be eligible for pandemic cover.

"What we said is that a reasonable person trying to understand the policy would appreciate the diseases listed as quarantinable," Mr Waller said.

"That list you can Google, that's the appropriate meaning and there shouldn't be a special interpretation to try to extend it to a listed human disease in the Biosecurity Act."

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The case is designed to set a precedent and was launched by the ICA alongside the Australian Financial Complaints Authority (AFCA) after a claims dispute.

ICA chief executive Andrew Hall said he was glad the case had been expedited.

"The pandemic and resulting uncertainty have had a devastating impact on Australia, so we are pleased the test case hearing is progressing as quickly as possible, and a judgement can be delivered that provides greater clarity to customers, insurers and regulators in the treatment of pandemic-related claims," he said.

"Globally, insurers generally regard pandemics as uninsurable risks."

A decision is likely before the end of the month.