NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In

Advertisement
Advertise with NZME.
Premium
Home / Business

More lockdowns could open door for business interruption insurance claims, lawyer says

Tamsyn Parker
By Tamsyn Parker
Business Editor·NZ Herald·
30 Nov, 2020 04:00 PM7 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

    Reminder, this is a Premium article and requires a subscription to read.

Could businesses forced to close by another lockdown find a way to claim on business interruption insurance?

Could businesses forced to close by another lockdown find a way to claim on business interruption insurance?

Another lockdown could open the door for some New Zealand businesses to claim on their business interruption insurance policies based on a test case being taken in the UK, a legal expert believes.

But the chief executive of the body that represents New Zealand's insurers says New Zealand's policies are much tighter, and he doubts any would be able to make claims.

Insurers and legal experts have been closely watching two major legal test cases - one in the UK and the other in Australia.

The UK case has already been fast-tracked through to the Supreme Court with unheard-of speed, with the possibility of the judge making a ruling on it this side of Christmas.

Advertisement
Advertise with NZME.

A High Court case found largely in favour of policyholders although the Supreme Court appeal was taken by both insurers and regulator the Financial Conduct Authority.

While earlier this month in Australia the New South Wales Court of Appeal rejected the insurance industry's argument that policies do not cover Covid-19 losses prompting major insurers to provision for future claims.

The Australian case centred around insurers refusing to pay for Covid-19 related claims based on policies excluding interruptions caused by quarantinable diseases.

But many of the policies mistakenly referred to the Quarantine Act - a law in Australia which was repealed in 2015 and replaced by the Biosecurity Act. The Insurance Council of Australia has said it will look to appeal the case.

Advertisement
Advertise with NZME.

Jonathan Scragg, chair of Duncan Cotterill, said in New Zealand many businesses impacted by Covid had tried to claim business interruption insurance, only to come up against a pandemic exclusion in their contracts.

But he said the recent case in the UK may have significant consequences for New Zealand insurers.

"In the Financial Conduct Authority case, a UK high court found that the impacts of a government-mandated lockdown were separate from those caused directly by the pandemic. While the pandemic might stop many people going out or spending, the lockdown was a government decision and not necessarily covered in the pandemic exclusion."

Scragg said that may inspire similar cases here should New Zealand enter another lockdown.

"What is interesting to me about the UK case and this is where I think we may yet see something is what that case really did was to tie together Covid and then Government lockdown restrictions that were imposed in Britain.

"There will be cover under a number of standard business interruption wordings because of both the pandemic but because the government is restricting or prohibiting access to your business premises which is the trigger for cover."

Scragg said that gave shades of grey, which New Zealand last experienced after the Canterbury Earthquakes when there was a wave of litigation after a number of business property owners who were in the red zone weren't allowed to access their properties.

"That was a problem because normally under a BI policy in order to have cover you have to suffer some sort of physical damage to property and that drives disruption. Some property in the red zone was entirely structurally okay and could be used but because they were in the red zone you couldn't get to them."

Advertisement
Advertise with NZME.

Scragg said a lot of BI policies didn't respond to that and as a consequence the wording of policies was changed to include additional trigger clauses including one for loss of access.

"And so if you now have a BI policy with a loss of access trigger and you didn't have a pandemic exclusion but you had a lockdown then arguably your policy would respond to that," he said.

Tim Grafton, chief executive of the Insurance Council of New Zealand. Photo / Supplied
Tim Grafton, chief executive of the Insurance Council of New Zealand. Photo / Supplied

But Tim Grafton, chief executive of the Insurance Council of New Zealand, said while it was possible to purchase an extension to a BI policy to cover you for closure of your business as a result of the actions of a public authority they specifically excluded closure as a result of an infectious animal or human disease.

"They will cover you for if there is a sewerage spill in the street or infestation of rats in the area and have to close or hazardous material contaminating the area and the authority has said everyone out of here. Or if the property next door is about to fall over and deemed to be dangerous.

"Those extensions have specific exclusions in them that say but not a closure as a result of infectious animal or human disease.

"So the causality is specifically addressed typically in New Zealand policies."

He said the only conceivable policy in NZ where a claim could be made were ones where people have purchased cover that specifically covered a business for an infectious disease outbreak.

"And there are very few of those around."

Grafton said most New Zealand business interruption policies excluded pandemic cover and this was tightened in the 2000s after the outbreak of SARs in 2003 and then H1N1 swine flu 12 years ago.

"Back in that first decade of this century policies particularly in the Asia Pacific have had pandemic exclusions right in there for denial of access.

"So typically you might have an extension to a BI policy always triggered by material damage but your extension might be you get covered for closure of your business as a result of hygienic issues or damage to any property in the area. Typically policies in NZ say we will cover you for those various things but not a closure as a result of any animal or human infectious disease, so in our view it is most unlikely, well none of those policies would be covered by the decisions in the UK High Court."

But Scragg said he believed the UK court case had sowed a seed of doubt.

"What FCA [UK Financial Conduct Authority] case does is just start to sew a seed of doubt in some people's minds that perhaps it is not so black and white, at least it wasn't in UK.

"And so if we were to have another lockdown maybe that would help a policyholder if they were wanting to look at a possible claim."

He said it may take a group looking to take class action or one large business to take a case to test it.

"If we did have another lockdown watch this space. It is not an entirely closed book of possibility."

The Reserve Bank also mentioned the cases in its recently released Financial Stability Report.

"The insurance industry believes that the policy exclusion wordings used in New Zealand are clearer than those in other jurisdictions, and there is no need for legal test cases like those currently going through, for example, the UK and Australian courts.

"Those courts have ruled in favour of insured parties, but the findings are subject
to appeals. It is not yet clear how these rulings might affect the insurance industry in New Zealand either directly or indirectly through decisions made by overseas parent-entities."

Save

    Share this article

    Reminder, this is a Premium article and requires a subscription to read.

Latest from Business

Premium
Shares

Market close: Fisher & Paykel up as NZ sharemarket closes strongly

Property

'We're saying no' – house-building boss on timber price hikes

Premium
Airlines

Industry boss says cockpit video recorders might be good idea in future after Air India crash


Sponsored

Tired of missing out on getting to global summits to help grow your business?

Advertisement
Advertise with NZME.

Latest from Business

Premium
Premium
Market close: Fisher & Paykel up as NZ sharemarket closes strongly
Shares

Market close: Fisher & Paykel up as NZ sharemarket closes strongly

The NZ sharemarket rallied today as key weighted stocks had strong performances.

17 Jul 06:13 AM
'We're saying no' – house-building boss on timber price hikes
Property

'We're saying no' – house-building boss on timber price hikes

17 Jul 05:07 AM
Premium
Premium
Industry boss says cockpit video recorders might be good idea in future after Air India crash
Airlines

Industry boss says cockpit video recorders might be good idea in future after Air India crash

17 Jul 04:00 AM


Tired of missing out on getting to global summits to help grow your business?
Sponsored

Tired of missing out on getting to global summits to help grow your business?

14 Jul 04:48 AM
NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP