The meaning of “accidental damage”

Brick demolition
The Technology & Construction Court decision in Leeds Beckett University v Travelers contains a useful review of the meaning of the term “accidental damage” in the context of a claim under an ‘all risks’ policy. Following the emergence of cracks in an accommodation block, the claimant university demolished the building and claimed against its property insurer for the costs of reinstatement. The building had been built with an undercroft and adjacent to a canal and the sulphates flowing in the water had turned the supporting concrete blocks into “mush”. The insurer declined indemnity, relying on an exclusion for damage caused by (among other things) inherent vice, latent defect, wear and tear and faulty or defective design or materials. “Damage” was defined as “accidental loss or destruction of or damage.”

The key issue for the court was what was meant by “accidental damage”. The judge reviewed the relevant authorities and provided a useful checklist of the principles that can be derived from them:

  1. The claimant must prove that the loss was caused by some event covered by the general policy wording, but does not have to prove the exact nature of the accident.
  2. Accidental damage means damage that was not wilful or deliberate.
  3. Accidental damage means damage that was caused by a chance event, against the risk of which the insurance was taken out.
  4. Accidental damage does not mean damage that was inevitable.
  5. Inevitability will be assessed prospectively, from the time that the cover was taken out. Foreseeability is irrelevant.
  6. Accidental damage does not mean damage to the property due to the inherent characteristics of that property.
  7. There is a critical distinction between those cases where the damage was caused by an inherent weakness and those where it was caused by an external fortuitous event.
  8. The policy should be construed in accordance with the ordinary rules of construction.

On the facts, it was held that the event which caused the damage could not be classified as a flood (as argued for by the university) and, given the way the building was constructed, it was inevitable that the concrete blocks would fail. The damage was not, therefore, “accidental damage” within the meaning of the policy and the insurer had no liability to indemnify the university.