Damage to Surrounding Property

Underwriters have recently successfully defended a policy coverage dispute in the case of Technip Saudi Arabia Limited v The Mediterranean and Gulf Cooperative Insurance and Reinsurance Company ([2024] EWCA Civ 481).

As detailed in Trident’s opinion piece of November 2023, in the court of first instance, underwriters had successfully denied coverage under the Liability section of an Offshore Construction insurance contract in respect of damage sustained by an existing fixed offshore platform. Such damage taking place during project works relating to an oil & gas field offshore Saudi Arabia - See OPINIONS article: Damage to surrounding property.

In particular, underwriters had successfully established that a policy requirement, to expressly declare and agree any surrounding property owned by the Principal Assured, applied to property owned by any Principal Assured named in the policy. In the case under consideration, the owner of the surrounding nearby platform and the contractor responsible for the damage sustained by such platform were both Principal Assureds under the policy. A failure to declare the platform that sustained the damage resulted in the court of first instance finding in favour of underwriters and denying the claimant contractor coverage under the policy.

The contractor was granted leave to appeal the aforementioned point. However, the Court of Appeal concluded that the requirement to expressly declare and agree surrounding property applied to all property owned by any Principal Assureds under the policy. Accordingly, the claimant’s submission for coverage under the policy failed.

The decision of the Court of Appeal highlights the importance of prospective policyholders liaising with their insurance advisers to ensure policy terminology delivers appropriate and effective coverage.