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.
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With CFJ the case is settled at the mediation stage, and the claim is withdrawn following guidance from the CFJ assessor.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.