Sub-contractor unable to benefit from project insurance for construction works
In Haberdashers’ Aske’s Federation Trust v Lakehouse Contracts Ltd & Ors  EWHC 558 (TCC) the High Court considered for the first time the mechanism by which a sub-contractor obtains the benefit of project insurance.
Lakehouse was appointed the main contractor for the construction works. Project insurance was obtained covering a list of insureds including Lakehouse and its sub-contractors. Lakehouse later entered into a sub-contract with CPR to carry out roofing works, which included an express terms that CPR would obtain its own insurance cover. After a fire caused extensive damage to the existing buildings and works, Lakehouse admitted liability and brought an additional claim against CPR. CPR’s defence contended that project insurers were precluded from bringing a subrogated claim against CPR on the basis that CPR was a co-insured under the project insurance.
Fraser J considered the legal routes for CPR’s inclusion within the project insurance, including agency, acceptance by conduct and a “standing offer” analysis whereby insurers were considered to have made a standing offer to insure persons who subsequently became sub-contractors. Fraser J gave primacy to the express terms of the sub-contract and to CPR’s intention, objectively assessed, to obtain its own insurance policy in respect of works and not to rely on the project insurance.
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