Defense Counsel Journal - International Association of Defense ...

The Global Supply Chain Page 433the remainder of the claim. At issue wasthe meaning of the “Extra ExpenseCoverage” (“EEC”) and the “ContingentBusiness Interruption and Extra ExpenseCoverage” (“CBI”) in the Difference-in-Conditions (“DIC”) policies.Regarding Extra Expense Coverage,the court held that the physical damagerequirement in the policy did not requiredamage to the insured’s property orscheduled locations and that damage tothe property of suppliers of goods andservices was covered. 72With respect to CBI coverage, thedispute concerned whether or notMidwest farmers and the United StatesGovernment, through (1) the Army Corpsof Engineers (“Corps”) (which operatesand maintains the Mississippi Riversystem), and (2) the United States CoastGuard (which “maintains systems ofmarine aids to navigation consisting ofvisual, audible, and electronic signalswhich are designed to assist the prudentmariner in the process of navigation”), aresuppliers of goods and services under thepolicies.The court noted that a substantial partof the insured’s raw materials “travel bybarge in the Mississippi River and itstributaries. When barge traffic was haltedbecause of the flooding, [the insured] hadto arrange alternate– and moreexpensive– transportation by rail....[Theinsured] argues that the plain language ofSection 13 (Q) supports its assertion thatits costs for alternate transportation arerecoverable under the policies.” Section13 (Q) is set forth below.This policy covers against loss ofearnings and necessary extra72 Id. at 538.expense resulting from necessaryinterruption of business of theinsured caused by damage to ordestruction of real or personalproperty, by the perils insuredagainst under this policy, of anysupplier of goods or serviceswhich results in the inability ofsuch supplier to supply aninsured locations [sic].The court agreed with the insured’sargument and found that the Corps andthe Coast Guard are “suppliers of goodsand services” under the policies. 73 In thisregard, the court noted that “Governmententities have been recognized as playing adual role in commerce, that of ‘regulator’and that of ‘market participant.’” 74 Thecourt also held that coverage under thepolicies is not limited to principalsuppliers or suppliers with the insuredunder a written contract. The policyapplies to “any supplier.”3. Trade Disruption InsuranceTrade Disruption Insurance isrelatively new to the marketplace. Thereis no developed line of reported casesinterpreting coverage under such policies.As with all areas of insurance coverage,disputes and resulting litigations, are onlya matter of time. One recent case, TamkoBuilding Products v. Factory MutualInsurance, is instructive. 75 In that case,the plaintiff manufactured roofingmaterials, including various types of73 Id. at 542.74 Id. at 543.75 No. 4:10CV89, 2012 U.S. Dist. LEXIS117622 (E.D. Mo. Aug. 21, 2012).