Successfully negotiating claims since 1867
The case of Leeds Beckett University v Travelers Insurance was heard in the Technology and Construction Court late last year. The university had built accommodation blocks on a site that presented various difficulties, notably ground water with high sulphate content which eventually caused the foundations to fail with subsequent demolition of the buildings.
The policy covered accidental loss and the issue was whether the damage fell within that description. The judge said that if the damage was inevitable, then that could not be considered accidental. Accidental essentially means something that is fortuitous and non-deliberate. Inevitability cannot be thought of as accidental damage. The example the judge gave of universal inevitability was wear and tear, which is in any event specifically excluded in most policies. It is interesting that the judge did not necessarily consider that damage by inherent vice is necessarily non-accidental: the facts are important. In relation to inevitability the test is that, if the parties to the contract would readily view the event as something that was going to happen, it should not be regarded as fortuitous. But if a possible but not certain event is triggered by external causes, that is accidental.
In the current case the evidence led to the conclusion that the buildings had no chance of survival and on that basis it was decided that there had not been accidental damage. At the time the policy was taken out, some 15 years after construction, the damage was inevitable.
It’s our view that where insurers argue inevitability the question to be asked is: at the time the policy was taken out did the parties consider that the event claimed was – note the certainty – going to happen during the currency of the policy? This has proved to be a live issue in claims for historic buildings where age is a contributory factor but there are external forces in play as well.