Businesses should review their current insurance cover
for business interruption losses.
The Varanus Island gas plant explosion in Western Australia
on 3 June serves as a timely reminder to businesses to check
what risks they are insured against - or risk being out of
The explosion at Apache Energy's gas plant on
Varanus Island off Karratha in Western Australia is reported to
have cut the state's energy supplies by 30 percent,
affecting businesses across a wide range of industries
including building, manufacturing and tourism.
It serves as a reminder that all businesses, particularly
power generation companies and manufacturers that rely on gas
supply, should review their Industrial Special Risks (ISR) or
Business Property insurance policies for possible business
interruption cover - which may extend to circumstances where a
supplier to the business sustains damage.
Most forms of Fire and Perils and Industrial Special Risks
insurance policies in Australia provide cover for business
interruption losses where they result in material damage as the
result of an "Insured Peril", which can include:
Increased production costs due to the need to obtain and
retool for alternative sources of gas or other energy
Loss of turnover/output
Increased cost of sales due to the need to buy in
However, some companies may not be aware that such policies
can also contain optional or automatic extensions of cover,
known as the 'Utility Supply Interruption
endorsement' and 'Specified and Unspecified
Suppliers/Customers endorsement'. These
"endorsements" can provide cover for business
interruption losses where an event has caused material damage
to a supplier of the business - rather than the business
In similar previous cases, many of the claims for
consequential losses were, in fact, brought by subrogating
insurers who had paid substantial claims under these extensions
to their policies.
It is important that businesses review the extent of cover
provided by these endorsements, as they may be subject to
different sub-limits of cover. There may also be other relevant
exclusions and limitations which require analysis depending on
the specific terms of the policy.
The content of this article is intended to provide a
general guide to the subject matter. Specialist advice should
be sought about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The failure of a party to call a witness does not necessarily give rise to an adverse inference being drawn in accordance with Jones v Dunkel (1959) 101 CLR 298. An unfavourable inference is drawn only if evidence otherwise provides a basis on which that unfavourable inference can be drawn.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).