African Products (Pty) Ltd v AIG South Africa Ltd

African Products (Pty) Ltd operated a maize milling plant whose machinery relied entirely on electricity supplied through underground power cables. In September 2002 multiple cable failures occurred beneath one substation due to overheating caused by poor cable layout, which led to the gradual deterioration and wearing away of PVC insulation around copper conductors. The deterioration caused conductors to come into contact, tripping switches and disrupting production. The mill was shut down from 19 September to 15 October 2002 while temporary and redesigned cabling was installed. African Products claimed for loss of gross profits under a business interruption insurance policy issued by AIG South Africa Ltd, which covered loss caused by 'unforeseen and sudden physical damage' to machinery.

The appeal was dismissed with costs, including the costs of two counsel.

The case is a leading South African authority on the interpretation of the phrase 'unforeseen and sudden' in insurance policies. It confirms that 'sudden' carries a temporal meaning and that gradual deterioration, even if undiscovered and manifesting abruptly, does not qualify as sudden damage. The judgment reinforces orthodox principles of insurance contract interpretation and has enduring relevance for business interruption and engineering insurance claims.