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Insurance - Negligence - water damage to hotel

Negligence - water damage to hotel

A south coast hotel company was undertaking a substantial refurbishment which was due for completion in late spring 2010. The project ran behind schedule and the profitable summer holiday season was missed. In late summer the hotel suffered water damage with a repair cost of £90,000.

The loss adjuster to the builders’ insurer suggested that the hotel owner had been in some way responsible for the water damage and might be trying to recoup the losses suffered from missing the summer season. They could find no evidence that the damage had been caused by the builders. The insurer declined to cover the loss.

Going to Court

The proceedings are drawn out with several interlocutory hearings and extensive and contradictory witness and expert evidence. The builders join the architects and the case takes 30 months to come to trial.

The Judge finds that the water damage was caused by the installation of incorrect fittings. The builders had ordered different fittings from those specified by the architect.

The hotel owner was awarded a total of £175,000 including consequential loss and interest and the insurer has to pay both sides legal costs of £165,000, a total payment of £340,000.

Following the case there is considerable local press coverage adverse to both the builders and the insurer and, following a downturn in their business, the builders go into liquidation.

With Centre for Justice (CFJ)

Within one month of solicitors being instructed, the assessor, a QC with construction experience, meets with all parties and begins his investigation. The insurer asks for an initial view and is informed that from the order sheets it may be the fittings ordered were different from those specified. The building surveyor instructed as an expert states this could have caused the water damage.

Given the assessor’s preliminary view and a further meeting, the insurer offers a settlement of 80% of the sum claimed. The hotel owner accepts the discount as it has found a contractor who could complete the work before the spring holiday season. This is more important to it than making a full recovery. Settlement is achieved within 6 weeks of referral.

The hotel owner receives £79,500 and the insurer pays the Centre’s fees of £7,500.


Cost saving with CFJ: £157,500 (95%).

Other benefits of using CFJ:

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