Accidental Damage - will your Insurance Policy Cover it?

In a recent decision given in the matter of Leeds Beckett University (formerly Leeds Metropolitan University) v Travelers Insurance Company Ltd [2017] EWHC 558 (TCC) the court held that damage to a building caused by the normal flow of spring water was not ‘accidental damage’ for the purposes of the owner’s insurance policy. While most of the judgment is fact specific it did helpfully set out principles to be considered when determining whether damage is accidental.

In this matter, some 15 years following completion, cracks started to appear in one of the buildings. It emerged that an area of concrete blockwork below ground level had ‘turned into mush’ due to the effects of flowing water, and the building had to be demolished.

The University made a claim under its insurance policy but it was denied on the basis that the damage was not covered. The policy only provided cover for ‘accidental damage’, and even if damage was accidental it would not be covered if it was caused by gradual deterioration, faulty/defective design or contamination (the exclusions).

On the evidence, the court determined that the damage was caused by the flow of spring water against the blockwork, due to the building having been constructed across the line of an old watercourse.

In considering whether this was accidental damage, the court summarised the following relevant principles:

1. The claimant must prove that the loss was caused by an event covered by the general policy wording, but does not have to prove the exact nature of the accident

2. Accidental damage must be caused by a chance event. The following damage is not regarded as accidental:

            - Willful or deliberate damage

            - Damage which is inevitable at the time the cover was taken out 

3. The policy should be construed in accordance with the ordinary rules of construction

The court concluded that the damage was not accidental—there was no flood or change in the flow of water, and when the policy was taken out the collapse was inevitable. 

It would seem from this matter than the effective party would have to seek damages from architects and/or construction contractors, but given the passage of time it is likely any claims would be subject to limitation.