A policy exclusion for damage caused by ‘gradual deterioration’ was held to exclude cover where a building had to be demolished by reason of foundations which disintegrated from flowing water. The building was built across a line of an old watercourse with seven natural springs in the vicinity and there was no proper drainage design.
Spring water flowed against the concrete brickwork supporting a four storey-high cavity wall reducing the concrete blocks to mush.
The insurance contract was taken out in August 2011 and the damage occurred in December 2011. When the contract was taken out it was inevitable that the concrete blockwork would fail and the loss was not accidental.
The damage was also excluded because the cause was gradual deterioration which was excluded.
Gradual deterioration means the natural behaviour of the subject-matter of the insurance including its interaction with the circumstances in which it exists, namely the ground on which it stood and the water which flowed against it. The word ‘gradual’ is intended to convey something which develops over time. The damage to the blockwork happened over a period of at least 10 years. It was not sudden, dramatic nor catastrophic.
It was also held that the damage was caused by faulty/defective design which was excluded.
The insurer was not required to demonstrate negligence or personal blame in the design. The evidence which showed that the groundwater drainage was unfit for its purpose was enough. The known and predictable problems with groundwater on the site were simply not addressed. The insured’s claim failed.
The decision is Leeds Beckett University v Travelers Insurance Co Ltd.