Insurance Australia Limited v Meridian Travel (Vic) Pty Ltd; Taphouse Townsville Pty Ltd v Insurance Australia Limited; LCA Marrickville Pty Limited v Swiss Re International Se

Insurance Australia Limited (IAL) and Swiss Re International SE (Swiss Re) were the appellants in these three consolidated appeals, which concerned the interpretation of the term "loss" in the context of business interruption insurance policies. The respondents were Meridian Travel (Vic) Pty Ltd, Taphouse Townsville Pty Ltd, and LCA Marrickville Pty Limited, who had each sought to claim under their respective policies following the COVID-19 pandemic. The central dispute revolved around whether the insured losses were confined to physical damage to property or extended to losses arising from the inability to use insured property due to government-imposed restrictions, even in the absence of such damage. The appeals were heard by the High Court of Australia.

The High Court was required to determine whether the business interruption policies issued by IAL and Swiss Re covered losses arising from the COVID-19 pandemic, specifically where the insured businesses were unable to operate due to government-mandated lockdowns and restrictions, but without any physical damage to their insured premises. The core legal question was the proper construction of the word "loss" within the context of the policy wordings, particularly in relation to the causation of that loss and whether it was confined to physical damage or extended to other forms of disruption.

The High Court held that the policies did not cover the losses claimed by the insured businesses. The Court reasoned that the policies provided cover for business interruption losses that were caused by physical damage to insured property. The pandemic itself, and the subsequent government restrictions, did not constitute physical damage to the insured properties. Therefore, the proximate cause of the loss was not physical damage, but rather the government's response to the pandemic. The Court applied principles of contractual interpretation, emphasizing that the plain meaning of the words in the policy, read as a whole, dictated the scope of cover. The Court found that the inclusion of specific exclusions for certain types of disease or epidemic, and the absence of any express provision for cover in the absence of physical damage, supported this interpretation.

The appeals were allowed, and the decisions of the lower courts in favour of the insured businesses were overturned.