In the law of insurance, it is the proximate or real cause of the damage which determines the extent of cover and whether exclusion clauses apply.
An insurer has succeeded in obtaining declarations that property damage resulting from a bomb explosion was not covered by an insurance policy which excluded “war damage” in Allianz Insurance plc v University of Exeter [2023] EWHC 630 (TCC).
In February 2021, contractors working on a construction site adjacent to the defendant’s campus unearthed an exploded bomb which was identified as a 1,000kg high-explosive bomb dropped by German forces in 1942, nicknamed “the Hermann”.
The condition of the bomb, owing to its age, rusting and uncertainty as to whether it was booby-trapped, meant that it could neither be safely removed from the site nor have the explosive removed. The only realistic course of action was to detonate it. While precautions were taken – a metal fence was erected around the bomb which was packed with sand and trenches were dug to limit the ground shock – the controlled explosion resulted in the complete destruction of the bomb and the release of its full explosive load, which damaged buildings in the area.
The defendant sought to claim for the damage to student halls of residence and business interruption in connection with the temporary rehousing of students under its insurance policy with the claimant. The claimant declined the claim on the basis that any loss or damage suffered by the defendant fell within the scope of a “war” exclusion, being loss and damage “occasioned by war” within a general exclusion clause defining the scope of cover.
The court needed to identify the proximate cause of the loss. Was it the dropping of the bomb, which was accepted as an act of war, as the claimant contended, or was it the deliberate detonation of the bomb, as the defendant argued?
The common-sense analysis was that the loss was caused by an explosion which was triggered by the reasonable decision to detonate the bomb, which was necessitated by the presence of the bomb. The presence of the bomb was either “the” proximate cause of the damage or “a” proximate cause concurrent with its detonation, since both the presence and the detonation were causes of the damage equal or nearly equal in their efficiency. Detonation was not “the” proximate cause of the damage. There was nothing in the policy which ousted the operation of the concurrent proximate causes rule and so the “war” exclusion applied.
Louise Clark is a property law consultant and mediator
