Defense Counsel Journal - International Association of Defense ...

Page 436 DEFENSE COUNSEL JOURNAL–October 2012ships may lie alongside to receive anddischarge cargo and passengers.” 78 Theresulting inquiry was whether the damageto the monobuoy, the three-room buildingwhere ships would dock and unload oil,would be covered under the terms of thepolicy.The court concluded that “themonobuoy and pipeline system does fitwithin the policy's list of coveredlocations.” The court held that themonobuoy constituted a building giventhat it was composed of walls and a roof,and workers occupied the space forseveral hours at a time. In addition themonobuoy also met the definition of awharf, as it was built to allow ships todock alongside the buoy to unload oil,and it constitutes a dock because it is aplace to discharge cargo.The court flatly rejected FactoryMutual's argument that the “monobuoy”was not covered solely because thatprecise term was not contained in the listof locations, concluding such anargument was “not a reasonableconstruction of the policy.” The courtheld:Rather, the policy, when readas a whole, is broad andinclusive, providing coveragefor all “locations” of theinsured's suppliers and thesuppliers' suppliers, evenwithout listing those suppliersin the policy itself. Such abroad and inclusive policy isnot subject to such a narrowconstruction of a particularphrase, analyzed in isolation. Iconclude that the monobuoyitself is a covered locationunder the policy, such thatTamko's loss from the damageto the pipeline is covered. 79Clearly, Tamko is fact specific, and itis difficult to extrapolate any overarchingguidelines regarding trade disruptioninsurance and potential coverage disputesbeyond the concept that while TDIcoverage is new to the marketplace itremains insurance, no more, no less. Thesame rules of underwriting, policyconstruction, and scope of coverageapply. Claims for coverage, as with anyinsurance dispute, will be governed by theterms and conditions of the policy.Insureds, insurers and counsel must becognizant that, while this market is newand expanding, the same rules still apply.E. Getting Coverage - WhatInsurers Will Want To KnowInsurers underwriting coverage forTDI will need to fully understand thepotential policyholder’s supply chain. Aninsurer will also want to gain insight intothe policyholder’s supply chainmanagement system and will askquestions like: Have contingencies beenconsidered for each point on the supplychain? Has there been an estimate of costfor each contingency? Can thepolicyholder bear the costs of aninterruption?A full picture of the supply chain,points of weakness and the ability of thepolicyholder to prepare for, and react to,78 Id.79 Id. at *12.