Most buildings insurance policies will insure the owner against ‘accidental’ damage to the property. The Technology and Construction Court (TCC) has recently had to consider what amounts to accidental damage. The case, which concerned a property in Leeds, was Leeds Beckett University v Travelers Insurance Company Ltd  EWHC 558 (TCC).
In the 1990s, the claimant carried out development works on the site of the old Kirkstall Brewery, turning some of the old buildings into new accommodation blocks. The largest building (“the Building”) was along the bank of the Leeds-Liverpool canal. The claimant found the site difficult to develop, not least because it was wet and there were disused mine shafts on the site.
In December 2011, large cracks appeared in some of the walls and ceilings of the Building on the side next to the canal. The cracking was to such an extent that the Building had to be evacuated. Investigations were carried out, and found that an area of concrete foundations had “turned to mush”. As a result, the concrete blocks had no structural strength at all.
The defendant insured the Building, and the claimant made a claim under the insurance. The policy covered property that had been damaged, and defined “damage or damaged” as “accidental loss or destruction or damage”. There were a number of exclusions to the type of damage covered, which included (among other things) damage by gradual deterioration, defective design or materials, latent defect or wear and tear.
The defendant declined to cover the claim. In 2012, the claimant demolished the entire Building and later issued proceedings in the TCC.
The TCC had to consider whether the defendant should cover the insurance claim.
The TCC first considered whether the damage was “accidental damage” in relation to this type of insurance policy. It decided that “accidental” would not cover inevitable events. Looking at the facts of this case, the TCC held that the way that the Building was constructed meant that it was inevitable that the supporting concrete would fail. This meant, therefore that the damage could not be “accidental”.
It went further to say that even if it was wrong, and the damage was “accidental”, the damage was excluded for gradual deterioration and defective design. Unfortunately for the University, the TCC decided therefore that the insurer was correct to avoid the policy.
While the definition of a term in an insurance contract will depend on the wording in each contract, this case gives insurers and insureds some useful guidance on what the court might construe to be accidental damage.