A gym operator forced to close his business during Victoria's coronavirus lockdown is suing his insurer after a claim for losses was rejected.
Christopher Blake took out business interruption insurance which he believed would pay up to $450,000 if his business, Jetts Fitness in Ocean Grove, was affected by events beyond human control.
In a claim filed in the Federal Court, his lawyers argue his business was prevented from operating between March 25 and September 23 last year by Victoria's stay at home orders.
He estimates the closure cost him $235,000 in revenue over that period.
But Hollard Insurance rejected his claim in December, arguing coronavirus was exempt from coverage under Mr Blake's policy.
The policy says cover does not apply in circumstances involving a disease declared to be a "quarantinable disease" under the Australian Quarantine Act 1908.
But Mr Blake's lawyers say that's a problem for the insurer because that legislation was replaced six years ago and is now redundant.
Five NSW Court of Appeal judges unanimously decided last year that references to the old legislation did not automatically become references to the replacement legislation, the Biosecurity Act 2015.
The Insurance Council of Australia has flagged plans to appeal that decision to the High Court.
Mr Blake's claim that the business was forced to close because of the state government's lockdown orders was also rejected, with the insurer claiming the stay at home orders were non-specific.
In a letter to Mr Blake the insurer said the orders set out social distancing measures and that "certain types of businesses must not remain open or must trade differently".
"The cover extended in the additional benefit was intended to apply to loss which resulted from an order made specifically in respect of the prevention of access to the location of insured business," the company said.
Solicitor Joseph Crane said the NSW decision had opened the floodgates for claims from small businesses, particularly in Victoria.
He said insurance companies had tried to "crab-walk away" from the wording of their policies
"The financial and emotional strain on small business owners in Victoria can't be underestimated and insurers need to pay up now rather than drag this through the courts any longer," he said.