Likely response from Insurers if you are sued for breaching COVID-19 regulations

Like many Australians, I could not believe the note I received from ABC News yesterday, which I reproduce below.

Due to the fact that you do not know if you have COVID-19, the ease of its transmission, and the terrible outcome for a percentage of the population who contract the illness, there is simply NO excuse.

With circa 25% that were checked found to be breaching the signed undertaking, a legal document, that they would self isolate, you can understand why the government was forced to insist that those coming to Australia now self isolate in hotels.

What I wanted to remind those that are breaching their undertaking, is that when there is someone who tests positive to COVID-19 there is around one thousand people working on contact tracing.

Let us say that the unthinkable happens, and you are linked to people who contract the virus. Besides having their condition on your conscience, it is possible that they, or their estate, may look to take action against you for negligence.

So, how will your insurer likely respond to this?

In my experience, very few Australian’s carry personal liability insurance in its own right. However, if you have home contents insurance you typically do have personal liability insurance.

The first hurdle for you looking down the barrel of a law suit, or multiple law suits, for negligently spreading COVID-19, is do you have home contents insurance? A conservative estimate is that at least 20% of households do not have home contents insurance. Straight off, you have missed out on $10, $20, or in some cases $30 million coverage for personal liability.

So, you have a home contents insurance policy. How would it likely respond? Home policies can different significantly so I just picked one of from one of Victoria’s largest home and contents insurers, RACV. The policy I chose is their Defined Events policy. The personal liability coverage is similar to many other policies in the market although, I say again, policies do vary.

The first thing I want to stress, is that this post is not intended to be any sort of endorsement or criticism of the policy. Everyone needs to look at the insurance Product Disclosure Statement of the policy that they are considering, and see if it matches their needs and risk appetite. If you need help, you should contact the insurer or, for tailored advice, a general insurance broker.

The Liability Section starts by saying:

Liability cover
Liability cover protects you or your family for claims that may be
made against you or them for an incident which causes:
• death or bodily injury to someone else, or
• loss or damage to someone else’s property.
The most we pay for any one incident is $20 million under Buildings
Insurance and $20 million under Contents Insurance. This includes
legal costs when our lawyers handle the claim.

[emphasis mine]

The Building cover only provides coverage for you while at home and as the scenario we are looking at is where the person has left the home, this cover would not provide protection. They would need Contents insurance. Even if the Liability coverage under building was unusual and covered personal liability away from the home, the same issue as I describe below would, in my opinion, apply.

The coverage afforded by the Contents Section of the Policy we are referring to reads:

Covered under Contents Insurance
We cover the legal liability of you or your family for:
• death or bodily injury to someone else, or
• loss or damage to someone else’s property
in an incident that takes place outside the site, but within Australia.
For example, you may be liable if you are riding your bicycle on a
road and cause an accident.
In addition, if you are a tenant or own your home under a strata or
similar scheme, we cover the legal liability of you or your family for:
• death or bodily injury to someone else, or
• loss or damage to someone else’s property
in an incident that takes place in your home or at the site and for
which you or your family is responsible as an owner or occupier of
your home or the site.

[Emphasis mine]

So far so good, the claim the Insured has received is alleging that they have caused bodily injury (or death) through their negligent actions.

So now, we come to the exclusions;

We will not cover:

any exemplary or punitive damages, fines or penalties claimed, ordered or awarded against you or your family.

This means that any fines or other penalties that the Insured received, will be to their own expense. This is long standing insurance practice, for to do otherwise would be against the public’s interest.

• any act or omission by you or your family, or a person acting with the
consent of you or your family, which shows a reckless disregard for
the consequences of that act or omission
• a deliberate and unlawful act by you or your family, or a person
acting with the consent of you or your family
• ……
• …….
• the transmission of a disease by you or your family.

[Emphasis mine]

It could not be plainer. The policy has three exclusions, straight off the bat, that clearly state that this Insurer –and I would suggest, any insurer– is not going to protect you for this type of event.

The bottom line is, that not only are these people putting other people’s lives and livelihoods at risk, they are taking on a significant amount of uninsured personal risk.

• That you may infect someone, family, friends, and or strangers if you have the virus yourself;
• That you become infected yourself; and or
• Your personal brand will be significantly damaged in your community.

At the very least, your actions mean that the economy cannot restart and all those who are affected, as a result, continue to hurt financially and emotionally.

The simple answer, STOP being so bloody SELFISH, stay home and follow the rules to protect you and the rest of us.

PS. Some real estate agents rightly came under fire for providing what was considered advice on a financial product, when they suggested tenants to draw down on their superannuation.

I, therefore, thought it appropriate to remind readers that I provide general advice on general insurance products, from time to time in this blog. I do so under Australian Financial Services Licence 283777.

To see my qualifications and experience please go to the “About me” section of this blog or click here.