Adrian Cartwright-Bain

DAMAGED ?

What is damage?

Involves change in nature

and

Some form of repair

Dictionary definition

“damage - Impairing the value or usefulness

of something”

Why relevant to BI ?

1. Material damage proviso

• Purpose

• Policy compliance

• Available resource

• Is it Effective

2. Extensions

Which Extensions ?

• Denial of Access

• Loss of Attraction

• Suppliers and Customers

Who has suffered damage?

• Policyholder (P/H) only

• P/H and neighbours

• P/H and wider area

Orient-Express Hotels v Generali

• Hurricane loss

• Hotel closed 2 months

• 1 month area curfew imposed

• What loss could be claimed (assume no extensions) ?

Apply “But-For” Test

• But-For the damage – the hotel could still not trade due to curfew, therefore no loss for that period

• Contrast with “Miss JJ” case, and general principals of law

“Miss JJ”

Liability exists for concurrent perils unless one is an excluded peril.

An excluded peril is assumed dominant unless the effects can be clearly

separated

Where does that leave our P/H ?

Damage to neighbours – assume access restricted

“but-for” our damage, loss is less than

expected turnover. Is that the intention of

policy?

Where does that leave our P/H ?

Wider damage – but assume access is less restricted

“but-for” damage, could we have expected more

business? Windfall profit ?

Orient-Express Hotels - Caution!

Specific policy wording is relevant – actual wording supported “but-for” interpretation in trend clause

• “had the damage not occurred”

• “but for the damage”

What about impairment?

• Pipes are blocked by frozen water but not split – bi loss as a result – is it covered?

• Road blocked by flooding - is it damaged? – 2007 CILA Flood note

•Road blocked by protestors (Bangkok protests) – is it damaged?

Conclusions

• Consider carefully how wide Damage/damage may be construed either at the premises or as an extension

• Consider if “but-for” is envisaged by the policy – if so, be prepared to consider wider implications

• Look out for market view, appeals and new cases

Adrian Cartwright-Bain

DAMAGED ?