The concept of 'damage' is fundamental to business
interruption insurance because without it there is often no
cover. A broad approach to what constitutes 'damage'
can therefore have a significant impact on the scope of such
policies.
The Victorian Supreme Court has generally adopted a wide
interpretation of the term 'damage'. In a recent
decision 'damage' was held to include a tripped fuse
located on the site of another business that stopped electricity
from being supplied to the plaintiff's business, causing
loss.
Interestingly, a design feature of the fuse was to
'trip' (i.e. cause damage to itself) to prevent damage from
being done to the electric circuit it was attached to. It
seems that, in Victoria at least, property may be considered
'damaged' if the object's use has been altered by an
incident that has made that object less useful or valuable,
regardless if damage was a function of its use.
