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- Are there circumstances when you may sign documents electronically or witness documents via an audio-visual link?
- What if your organisation can’t comply with contractual responsibilities because of COVID-19 or government restrictions?
- Can you cancel your insurance if your organisation has shut temporarily or permanently?
- Does public liability insurance cover any harm resulting from COVID-19?
- Should you take out additional insurance? If so, what types of insurance do you need?
- If your organisation has workers working remotely and this is likely to continue, do you need cyber liability insurance cover?
- If a worker or volunteer is diagnosed with COVID-19, will you be covered by your volunteer personal accident insurance or your WorkCover Insurance?
Are there circumstances when you may sign documents electronically or witness documents via an audio-visual link?
The legislation governing companies limited by guarantee, the Corporations Act, was amended until 31 March 2022 to allow company officers to sign documents electronically where they were previously required to sign the physical document (under the Treasury Laws Amendment (2021 Measures No. 1) Act 2021). The Corporations Amendment (Meetings and Documents) Act 2022 makes these changes permanent from 1 April 2022.
For more information about the use of technology at AGMS, refer to our COVID-19 governance page.
What if your organisation can’t comply with contractual responsibilities because of COVID-19 or government restrictions?
If COVID-19 restrictions in your state mean that your organisiation may not be able to comply with contractual responsibilities, identify the contracts your community organisation is a party to (these may be with clients, government departments other community organisations or businesses) and consider your obligations under these contracts.
Once you have a clearer picture of your exposure, examine which of the following options can apply to each contract:
- 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).
- 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.
- 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.
- 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.
Can you cancel your insurance if your organisation has shut temporarily or permanently?
- 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 announced relief packages for certain policyholders, including premium or policy deferrals and the waiving of cancellation fees. Contact your insurer to see if you are eligible for a relief package, or are able to negotiate individual relief in your changed circumstances.
Does your public liability insurance cover any harm resulting from COVID-19?
This depends on the specific terms of the policy itself and the circumstances of any claim.
- While public liability insurance will generally cover the cost of claims relating to injuries to a person or damage to property in connection with the organisation, many specifically exclude cover for claims related to outbreaks of infectious diseases, pandemics or other similar types of harm. If your current policy contains this kind of exclusion, you may not be covered for the cost of a claim brought against you in connection with COVID-19. 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.
Insurers may be reluctant to provide this type of cover and (even if you find a suitable policy), it may come with high insurance premiums.
Should you take out additional insurance? If so, what types of insurance do you need?
Review your insurance policies and consider whether you need additional insurance to protect you from any flow on effects of COVID-19 that may impact your organisation.
- COVID-19 may have disrupted your organisation or changed how you operate. For example, you may be facing increased health and safety risks in the workplace or you may need to stop operations or cancel events due to restrictions. Changes you have made to your service-delivery, such as moving to an online service-delivery model in response to COVID-19, may be presenting new risks and require you to change your insurance coverage.
- Business interruption insurance (also known as business continuity 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. 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 may be employers liability (or workers compensation) insurance. 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 (such as a COVID-safe plan), 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. Carefully review any potential policy and consider the impact of any relevant exclusions.
Also read our resources on insurance and risk through COVID-19.
If your organisation has workers working remotely and this is likley to continue, do you need cyber liability insurance cover?
Working from home presents 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.
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.
Consider carefully whether cyber liability insurance is appropriate for your organisation or necessary for your operations - 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, review the terms of any proposed cover carefully to make sure it covers the types of loss that you are likely to suffer.
In the current environment, premiums associated with cyber liability insurance may be increased.
If a worker or volunteer is diagnosed with COVID-19, will you be covered by your volunteer personal accident insurance or your 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.
However, as it’s not always possible to completely eradicate liability risks, it’s also important to make sure your business has appropriate insurance cover:
- Voluntary workers personal accident insurance – this covers volunteers carrying out voluntary work on behalf of your organisation and typically covers volunteers for injury in the workplace. It generally doesn’t cover illnesses (such as COVID-19) suffered as a result of volunteering. This insurance is therefore unlikely to cover a volunteer diagnosed with COVID-19. There may also be carve-outs in your policy that exclude loss caused by pandemics or infectious diseases. 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 insurance – this 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. Make sure there are no carve-outs for this type of loss in the specific terms of your policy.
Note - The fact that a worker has become infected with COVID-19 does not necessarily 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.
The content on this webpage was last updated in March 2022 and is not legal advice. See full disclaimer and copyright notice.