No coverage under manuscript BI policy for loss of power to supplier
An earthquake struck Taiwan in September 1999, disabling a substation that provided electric power to two Taiwanese factories. Lacking power, the factories could not manufacture products they were supplying to a subsidiary of the insured. When the factories resumed production two weeks later, the insured shipped orders from Taiwan via airfreight to meet its customers' needs for the Christmas season, thus incurring $634,731 in additional cost.

The insured filed a claim for this loss under the "Contingent Time Element" provision of its all-risk manuscript property insurance policy. The carrier denied coverage, and the insured sued in a U.S. federal district court. The court granted the insurer's request for summary judgment. The insured appealed.

Section 10(d)(1) of the manuscript policy covered extra expenses incurred to continue as nearly as practicable the normal operation of the insured's business following loss to property described in Section 10(a). That section described such property as all real and personal property owned, used or intended for use by the insured. This property was covered for "all risk of direct physical loss" or damage.