As anyone who lives in England knows all too well, rain is inevitable. However, in an important decision for the construction and insurance industries, the High Court has ruled that damage caused by heavy precipitation during a road-building project was nevertheless ‘fortuitous’, and thus covered by an all-risks policy.
A company that had been contracted to carry out bulk earthworks in connection with a new motorway had suffered losses in excess of £500,000 after rain damaged a capping layer and an area of sub-formation. Weather experts were agreed that, although the rainfall was heavy during the relevant period, it was not exceptional, without precedent or unforeseeable. The company launched proceedings after its insurers refused cover.
In upholding the company’s claim, the Court found that, although the risk of heavy rain may have been foreseeable, the damage caused was nevertheless fortuitous. There was nothing inevitable about incidents caused by the coming together of different factors culminating in heavy, but not exceptional, falls of rain.
The insurers’ arguments that the damage had been caused by the company’s wilful failure to arrange adequate drainage were also dismissed. There was no evidence that the company had taken a deliberate risk and, even if there had been negligence on its part, it fell short of recklessness. The damage was not otherwise excluded under the policy and the insurers were thus obliged to cover the loss.