University of Exeter v Allianz Insurance

Court of Appeal rejects appeal for a payout for damage caused by controlled explosion of a WWII bomb.

Almost 80 years after a bomb was dropped during World War 2, the University of Exeter has lost its appeal against its insurers for damage caused by the bomb’s controlled explosion. The controlled explosion was carried out in 2021 and caused damage to the university’s halls of residence, leading to the university making a claim for damage to buildings and business interruption.

The claim was rejected by the insurer and went to the High Court. The issue was whether the damage caused by the explosion was “occasioned by war” and therefore excluded under their policy.

The High Court judge was of the opinion that the dropping of the bomb in 1942 was the proximate cause of loss and therefore the exclusion applied as “Human actions are simply “not generally” regarded as new causes.”

The university challenged the decision in the Court of Appeal, on the basis that the war had ended 76 years prior to the damage caused by the controlled explosion.

The Court of Appeal judge ruled that there were two concurrent causes of the loss and damage, the dropping of the bomb in 1942 and its subsequent detonation in 2021. The former was excluded under the insurance policy, the latter was not. As one of the causes was expressly excluded by the policy, the claim should fail. The appeal was dismissed and the university was not able to recover damages from the insurer.

Consequences

It is important to note that this decision could have an impact on a client getting a payout in a situation where damage was occasioned by an ‘act of war’. Not all insurance policies will cover ‘war’ as a default.

Moreover, as proven by this case, sometimes, acts of war are not as blatant or obvious as they might have seemed. Here, it was a buried WW2 bomb that was detonated in a controlled way by bomb disposal professionals. Even though it was highly likely that the explosion would happen, the fact that it did happen was considered ‘war’ for the purposes of the law.

Proximate cause

The case sets a precedent in relation to buildings insurance. A bomb being detonated is not something people would necessarily see as “an act of war” but the Court of Appeal decided that because the bomb had itself been put there during the war, then the damage had therefore been occasioned by war. The fact that it was detonated at a later date did not therefore mean it was not an act of war. 

Clauses around acts of war are not necessarily something that would come to mind when looking at an insurance policy in England and Wales, but it is now worth keeping in mind, particularly if your property is close to sites that have been struck by bombs. Having a policy that does not cover damage ‘occasioned by war’ might have important consequences – as the University of Exeter had to find out their cost.

This article was written by Lucia Gallato and Charlotte Green.