EWHC 2828 (Comm)
A business interruption reinsurance policy can cover losses caused to the insured's business operations which did not exist at placement or during the policy period. This decision indicates that business interruption wordings may need to be reviewed to make clear which aspects of the insured's business operations are covered.
This dispute arose out of an incident that occurred at a copper mining and processing facility in Chile owned and operated by an Anglo American Group company insured by Bermuda-based Coromin. A design defect in a mill drive system caused a mill on the plant to stop working on 31 March 2005. A temporary repair was carried out in April 2005. Full repairs were not completed until March 2007.
One of the plants, constructed in 2005 after expiry of the 2004/2005 policy period during which the incident took place, could not be operated to full capacity whilst the repairs were being carried out. Coromin’s global reinsurance policy covered Anglo’s worldwide operations and was not drafted with a view to any particular asset or contract. The business interruption section insured against “loss resulting from the interruption of or interference with the business”. The “business'” was defined to include “all operations and activities of the Insured”. Given the breadth of the policy wording, the court held that Coromin could recover under its reinsurance in respect of the interruption to the plant. The policy wording did not require the business which is interrupted to be business existing at the time of the occurrence. The definition of “business” related to business carried on by the insured whether within the 12 month policy period or the 24 month indemnity period provided for in the policy.