Public liability

Structural collapse - consequential loss

Supermarket operator building a store over a railway cutting, through which Y Co had a license to run trains. Supermarket has public liability insurance cover for:

“legal liability which may be incurred in respect of death or bodily injury to any person and loss or damage to property arising from activities authorised by the [insured].”

During building works, a section of the structure collapses, closing railway line.
Insurer rejects Y Co’s claim for lost revenue.

Going to court

The case takes two years to reach trial. It is held that the policy does not cover pure economic loss, but insurer recovers only £172,000 out of its £254,000 costs, and none of parties recover the cost of staff time and disruption taken up. Y Co incurs total costs of over £300,000 and insurer loses supermarkets account valued at over £3.75 million p.a.

With CFJ

With CFJ the case is settled at the mediation stage, and the claim is withdrawn following guidance from the CFJ assessor. Total cost to all parties £8,000.

Benefits of using CFJ:

Saving in legal costs to insurer of £78,000 (100%)
Saving in legal costs to supermarket £290,000 (97%)
Both parties and their staff spared two years of time spent in unproductive litigation
Relationships restored and insurer retains valuable account

« Back to case studies