Sub-contractor unable to benefit from project insurance for construction works

In Haberdashers’ Aske’s Federation Trust v Lakehouse Contracts Ltd & Ors [2018] 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.   

For the full judgment click here.

Colin Edelman QC and Talia Barsam acted for the project insurers.

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