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Legal help for community organisations

Contracts and Insurance

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At this time, you may be reviewing your contracts to assess whether your organisation will be able to comply with its obligations. You may also be considering whether the insurance protection you have is adequate. We have considered these issues below.

For more information, you can also refer to our main resource pages on agreements and insurance

We have answers to the following questions:

  1. Are there circumstances when we may sign documents electronically or witness documents via an audio-visual link?
  2. What if our organisation can’t comply with contractual responsibilities because of the COVID-19 outbreak?
  3. My organisation has shut temporarily or permanently. Can I cancel my insurance?
  4. Does my public liability insurance cover any harm resulting from COVID-19?
  5. Should I take out additional insurance? If so, what types of insurance do I need?
  6. My whole workforce is now working remotely. What's cyber liability insurance cover and do I need it?
  7. If a worker or volunteer is infected with COVID-19, will we be covered by our volunteer personal accident insurance or our WorkCover Insurance?

1. Are there circumstances when we may sign documents electronically or witness documents via an audio-visual link?

On 6 May 2020, the Treasurer announced temporary changes to the operation of the Corporations Act to provide greater certainty around use of electronic signatures and the use of technology at AGMs.

Under the temporary changes, company officers will be allowed to sign documents electronically where they were previously required to sign the physical document. The aim of the changes is to ensure that documents can be properly executed at a time when ordinary business operations have been disrupted. These changes will be in effect for six months from 6 May 2020

For more information about the use of technology at AGMS, refer to our COVID-19 governance page.

NSW - Under emergency regulations passed in NSW, signatures on documents, including wills, powers of attorney, deeds, affidavits and statutory declarations may be witnessed via an audio visual link during the COVID-19 pandemic. These regulations only apply in NSW and will apply for no more than 6 months. For more information, read Clayton Utz’s article ‘NSW now allows signatures to be witnessed via audio-visual link’.

Victoria - Under the COVID 19 Omnibus (Emergency Measures) Act 2020, for a period of 6 months, affidavits may be witnessed via an audio visual link and affidavits may be electronically executed and attested.  For more information, see Allens' note on this.

Queensland - The Queensland Parliament has passed regulations that temporarily allow deeds, mortgages, general powers of attorney, wills, affidavits, and declarations to be signed electronically. The reforms also allow for documents to be witnessed via audio visual link. The reforms have temporary application and will expire on 31 December 2020. For more information, see Clayton Utz’s note on the changes.

ACT - Temporary measures have been passed in the ACT allowing for documents, including affidavits, to be witnessed and certified by audio-visual link for the purposes of Territory law. Those measures will also expire at the end of the COVID-19 declaration period. For more information, see the legislative instrument and Clayton Utz’s note.

This relief may be rolled out in other states and territories. We'll keep you updated on any developments.

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2. What if our organisation can’t comply with contractual responsibilities because of the COVID-19 outbreak?

As a result of the COVID-19 health crisis, many organisations won’t be able to comply with contractual obligations.

Identify the contracts your community organisation is a party to. These contracts may be with clients, government departments, other community organisations (for example sub-contractors or auspicing agreements) or businesses.

Then consider your obligations under these contracts and work out which obligations you may be able to meet, and which ones you're unlikely to be able to meet or won’t be able to meet.

Now you have a clearer picture of your exposure, examine which of the following options can apply to each contract:

Option 1 - find another commercial solution

You may be able to find a commercial solution to meet your contractual responsibilities in a different or innovative way. For example, a community group that has government funding to deliver a service may be able to find alternative ways to continue service-delivery (for example, online delivery).

Option 2 - suspend the contract

Some contracts include a ‘force majeure’ clause which allows parties to be relieved of their contractual responsibilities where there are unavoidable or unforeseeable events. Not all contracts have a force majeure clause. Where applicable and necessary, community groups should seek legal advice about applying the force majeure clause to the outbreak of COVID-19.

Option 3 - change or vary the contract

Many contracts will contain a variation clause that sets out a process to vary contractual terms. This may be an option for organisations who want to renegotiate the timeline or substance of KPIs, or the mode of delivering a service.

Option 4 - end the contract

If no other option is available, you may need to terminate the contract. Some contracts include terms that allow a party to terminate the contract if performance has become excessively burdensome or if the contract can’t be performed due to an unforeseen event (called ‘frustration’). Your community organisation should seek legal advice about terminating a contract in either of these ways.

You will need to work out the best course of action for each contract, depending on the operational, financial and reputational impacts for your organisation. More often than not, the other party to the contract will need to agree to any change. Therefore, you should get specialist legal advice before suspending performance of contractual obligations, terminating the contract or trying to vary the terms of the contract.

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3. My organisation has shut temporarily or permanently. Can I cancel my insurance?

It depends. Whether you are able to cancel your insurance as a result of your organisation shutting down temporarily or permanently will generally depend on the terms of your policy. You should review your insurance policy carefully to see whether there is an option for you to terminate your cover in these circumstances. 
 
If you are able to cancel the policy and you decide to cancel it, it’s likely that the contract will require you to pay certain fees, such as cancellation fees or administration fees. You may be entitled to a partial refund if the policy is cancelled.
 
Several Australian insurance companies have recently announced relief packages for certain policyholders, including premium or policy deferrals and the waiving of cancellation fees. If you want to know whether this is available to you, you should contact your insurer to see if you are eligible for a relief package, or are able to negotiate individual relief given your changed circumstances.
 

4. Does my public liability insurance cover any harm resulting from COVID-19?

Generally speaking, public liability insurance will cover the cost of claims relating to injuries to a person or damage to property in connection with the organisation. Whether your insurance policy will cover any harm arising from COVID-19 will depend on the specific terms of the policy itself and the circumstances of any claim.

Unfortunately, many public liability insurance policies specifically exclude cover for claims related to outbreaks of infectious diseases, pandemics or other similar types of harm. If your current policy contains any such exclusion, it’s possible that you will not be covered for the cost of a claim brought against you in connection with COVID-19. 

You should review the terms of your policy carefully to confirm whether your policy contains any relevant exclusions. If your insurance policy doesn’t cover this type of harm, you should consider whether it would be appropriate to take out additional cover to make sure you are covered for any future claims arising in connection with COVID-19. Be aware, in the current climate, insurers may be reluctant to provide this type of cover and even if you find a suitable policy, it may come with very high insurance premiums.

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5. Should I take out additional insurance? If so, what types of insurance do I need?

Now is a good time for you to review your insurance policies and consider whether you need additional insurance to protect you from any flow on effects of the virus that may impact your organisation. There are many ways that the virus may disrupt your organisation or change how you operate. For example, you may face increased health and safety risks in the workplace or you may need to stop operations or cancel events. Changes to your service-delivery, such as moving to an online service-delivery model in response to COVID-19, may present new risks and require you to change your insurance coverage.

One type of insurance that may help to protect your organisation in this uncertain time is business interruption insurance (also known as business continuity insurance). This insurance may protect your organisation if it’s forced to stop operating, but the extent of this cover will differ depending on the wording of the policy. Many business interruption insurance policies specifically exclude claims associated with pandemics and other similar scenarios. You should review the terms of any potential policy carefully to see if it will adequately protect you during the pandemic. For an insurance policy to be effective, it needs to cover losses arising from ceased business operations (and not just property damage). In some circumstances, insurers may agree to extend the policy to make sure it operates in the context of infectious diseases and similar events.

Another helpful type of insurance during this time may be employers liability (or workers compensation) insurance. Given the circumstances, your organisation may be at risk of claims from employees who contract COVID-19 during their employment. For example, if you fail to adhere to any mandated government restrictions or put appropriate measures in place, employees may claim that you failed to ensure a safe work environment. Depending on the policy, employee liability insurance may provide cover in these circumstances. Again, you should carefully review any potential policy and consider the impact of any relevant exclusions.

Also read our COVID-19 resources on managing work safety obligations in a time of crisis

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6. My whole workforce is now working remotely. What's cyber liability insurance cover and do I need it?

The COVID-19 environment may present new and additional risks to your organisation, particularly if your organisation is now more active online. Examples of such risks include both first-party losses and third-party liabilities that your organisation may incur as a result of a cyber-breach. 

First-party losses are direct losses to your company flowing from a cyber breach such as business interruption due to a ‘denial of service’ attack or paying a ransom to hackers in order to return, unlock or un-corrupt valuable company data. These losses may also extend to the cost of correcting the harm done, including forensic investigations, repairing damaged systems, getting legal advice, and managing and repairing reputational damage. Third-party liabilities are additional losses that may arise following a breach. This may include liability in negligence or contract for failing to properly protect your customers' data, liability for misleading or deceptive conduct for failing to comply with your own privacy policy, or fines imposed or sought by regulators.

Cyber liability insurance will generally cover some of the recovery costs that might arise from a cyber security breach or similar event. A cyber liability insurance policy should provide cover for both first-party losses and third-party liabilities that your organisation may incur as a result of a cyber-breach. However, certain types of loss may be carved out, depending on the exact wording of the policy. Given the current environment, the premiums associated with cyber liability insurance may be increased. You should carefully consider if cyber liability insurance is appropriate for your organisation or necessary for your operations. You should think about how reliant you are on your online operations and what kind of consequences could flow on from a data breach. Further, your current insurance policies may also cover losses or liabilities flowing from a data breach – for example, property damage and business interruption insurance. Reviewing your current cover and identifying any gaps is a good place to start when considering whether you need additional cover.

If you decide your business does need cyber liability insurance, it’s important to carefully review the terms of any proposed cover to make sure it covers the types of loss that you are likely to suffer.

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7. If a worker or volunteer is infected with COVID-19, will we be covered by our volunteer personal accident insurance or our WorkCover Insurance?

Workers and volunteers may be at risk of contracting COVID-19 while doing paid or voluntary work in workplaces or in the community. A substantial number of COVID-19 related WorkCover claims have already been made in Australia. To reduce your risk, put strict measures in place to limit any potential infection of workers or volunteers. Also read our COVID-19 resources on managing work safety obligations in a time of crisis
 
However, it’s not always possible to completely eradicate liability risks. As such, it’s also important to  make sure your business has appropriate insurance cover. You should look at your WorkCover insurance and, if you have volunteers, your voluntary workers personal accident insurance, and make sure it sufficiently covers your workers' activities. 
Voluntary workers personal accident insurance
Voluntary workers personal accident insurance covers volunteers carrying out voluntary work on behalf of your organisation. Voluntary workers personal accident insurance typically covers volunteers for injury in the workplace and generally doesn’t cover illnesses (such as COVID-19) suffered as a result of volunteering. This insurance is therefore unlikely to cover to a volunteer infected with COVID-19. Additionally, there may be carve-outs in your policy that exclude loss caused by pandemics or infectious diseases. You should review your policy carefully to understand the extent of your cover. It may also be helpful to speak to your insurer to clarify who will be covered for what in these circumstances. 
WorkCover
WorkCover insurance provides cover for employers if their employees become ill because of their work. In the COVID-19 context, this may include replacement of lost income and medical and rehabilitation treatment costs. A claim for COVID-19 will likely be assessed under the policy in the same way other viral disease claims are assessed. Again, you should check to make sure that there are no carve-outs for this type of loss in the specific terms of your policy. 
 
Of course, the fact that a worker has become infected with COVID-19 does not immediately entitle that person to bring a WorkCover claim. WorkCover applies to any personal injury arising ‘out of’ or ‘in the course of’ an employee's employment. Therefore, in order for WorkCover insurance to apply, there needs to be a clear link between a worker's employment and contracting the virus.
If this information doesn't answer your specific question, please contact us.
We have many other free resources that may be relevant to you. Access our complete library of resources on agreements, insurance and risk.

 

Last Updated: 05 June 2020

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