Leeds Beckett University v Travelers Insurance Company Ltd (Rev 1)

Under an all-risks buildings policy, the insured must prove that loss resulted from a covered event. Accidental damage requires a chance, non-deliberate and non-inevitable event. Foreseeability is irrelevant, but inevitability is assessed prospectively when the policy is taken out. Exclusions remain operative even where damage is accidental, according to the policy’s wording. Gradual deterioration may result from the interaction between the property and its environment. A faulty or defective design exclusion does not require negligence or personal blame; the insurer need show that the design was unfit for its purpose.

The claimant sought declarations that its insurers were liable under a buildings insurance policy for damage to a university building. The building had been constructed over an old watercourse and in an area containing springs. Groundwater progressively damaged supporting concrete blockwork, leading to cracking, structural movement and demolition.

The insurer relied on the policy’s exclusions for gradual deterioration, faulty or defective design and contamination. The claimant relied on accidental damage, a flood, and the proviso preserving subsequent damage caused by a cause not otherwise excluded. The principal issues were whether the damage was accidental, whether an exclusion applied, and whether the proviso was available.

1. The claim was dismissed. The damage was not accidental damage within the policy. There had been no flood and no material increase or change in the volume or flow of water. When the policy was taken out, failure of the blockwork was inevitable, although the precise timing was unknown.
2. Accidental damage meant damage caused by a chance event, which was non-deliberate and non-inevitable. The claimant did not have to identify the precise casualty, but had to prove that the loss resulted from an event covered by the general policy wording. Inevitability was assessed prospectively from the inception of cover.
3. The groundwater drainage design had been reactive and inadequate. It failed to deal proactively with known springs and an old watercourse. The flowing groundwater caused leaching and sulphate attack, progressively reducing the supporting blockwork to a mush and causing the visible cracking and structural failure.
4. Even if the damage had been accidental, it was excluded as gradual deterioration. That expression included deterioration caused by the interaction between the insured property and its environment, including the ground and flowing water. The relevant damage was the progressive deterioration of the blockwork, not merely the later visible cracking.
5. Alternatively, the damage was excluded by the faulty or defective design exclusion. The insurer was not required to prove negligence or personal blame. The applicable question was whether the drainage design was fit for its purpose. It was not.
6. Contamination from mine water was a secondary and non-critical cause. The damage would have occurred because of the flowing groundwater even without that contamination, so the contamination exclusion did not apply.
7. The proviso concerning subsequent damage was not pleaded and was unavailable. In any event, the cracking and structural damage formed part of the same damage caused by excluded causes. The proviso therefore would not have assisted the claimant.